As life is surrounded by uncertainties, one of the significant ways to lead a peaceful life is to ensure your financial security. Here is when a life insurance policy comes into play. Life policies not only provide your family with financial support in case you pass away but can also act as a way to build your wealth in the long run, depending on the type of plan you choose.
If you are considering purchasing a life insurance policy, this blog is for you. Read on till the end to have a comprehensive guide to life insurance coverage.
Types of Life Insurance Policy
Choosing the right type of life insurance policy is crucial to ensure you get the right coverage based on your unique needs. Go through the following points to learn about the different plans it comes with:
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Thursday 09 Jan. 2025
● Term Insurance Plans
Term plans are the most affordable life insurance plans. In these plans, the dependents receive a predetermined sum assured as the death benefit in case the policyholder passes away untimely within the policy term.
● ULIPS or Unit Linked Insurance Plans
These long-term investment plans provide you with life coverage and investment opportunities. They tend to have a lock-in period of 5 years and function according to fluctuating market conditions.
● Endowment Insurance Plans
These plans offer avenues of savings other than the usual coverage. Thus, once you start saving over a period of time, you can get a lump sum at maturity.
● Money Back Insurance Plans
Under this type of life insurance, you can get a few percent of your predetermined sum assured back at regular intervals throughout the policy tenure.
● Whole Life Insurance Plans
This type of insurance policy provides coverage until the insured member reaches 99 years of age. Thus, it can be the ideal option for individuals who wish to receive financial coverage until the end of their lives.
● Child Insurance Plans
If you have kids, you can choose this type of life insurance plan. You receive life cover to bear the expenses for your children’s higher education or help create their wealth in the future.
● Retirement Insurance Plans
This type of life insurance plan is beneficial in securing yourself and your dependents in your post-retirement life. These plans offer a steady income stream and financial stability, helping you maintain your standard of living once you retire.
Benefits of Having a Life Insurance
Life insurance is one of the smartest ways to increase your wealth and ensure the financial security of dependents, even in your absence. The following points feature the benefits it offers:
● Enhanced Financial Protection: The sum assured of the plan that your dependents receive from your long-term investment secures their financial stability in your absence, allowing them to fulfil their financial goals.
● Loan Against Policy: Based on the terms of your plan, you can borrow a certain percentage of your sum assured to manage your expenses better.
● Additional Coverage: To maximise the benefits of your investment, you can include multiple riders, such as a premium waiver, loss of income, complete disability, etc., in your existing term plan, whole life plan, endowment plan, etc.
● Tax Benefits: You can have a maximum deduction of ₹ 1.5 Lakh from your total taxable income under Section 80C of the Income Tax Act, allowing you to save a substantial amount.
Selecting the Right Life Insurance
You need to select the right life insurance plan for you to make your investment worth it. Follow the below points to do the same:
● Assess Your Financial Goals
Assess your long-term financial goals, including your kids’ higher education, marriage, buying a home, etc., to understand your financial requirements and the type of life insurance plan you need.
● Calculate the Desired Sum Assured
Determine the required sum assured by considering factors like debts, loans, mortgages, investments, etc. Calculate it using a life insurance calculator online. You can also go for coverage at least 10 to 20 times your current annual income.
● Opt for a Comprehensive Plan
Opt for comprehensive life insurance coverage with riders to get additional benefits, such as coverage for critical illnesses and accidental injuries, that further enhance the life cover of your existing plan.
● Compare Different Plans
You must consider conducting constructive comparisons among multiple life insurance plans based on the coverage they provide and the premiums you need to pay for that. Effectively comparing the different aspects of a plan will eventually lead you to the one that best suits your financial requirements and preferences.
Final Words
To wrap it up, investing in a life insurance plan is one of the wisest steps you can take to ensure a financially secure future for your family. It can be your financial saviour during the toughest of trials, preventing them from facing financial loss. So make sure to evaluate your requirements thoroughly and opt for a suitable life insurance plan today.
