There are various types and varieties of life insurance policies which makes it difficult for a person to buy life insurance Policy
that best suits his needs. This article aims to guide you on how to identify the most suitable policy depending on your current life assessment. What is The Purpose of Life Insurance?
Life insurance is essentially a contract between insurance company and the Policyholder
which ensures a payment of a sum of money to the dependant in the event of policyholder’s death. Some types of life insurance also offer you saving or income in retirement years apart from covering your life.
In case, you don’t have dependants, have saved enough for your retirement years and are well-off to take care of financial emergencies, you probably do not need to buy life insurance. But if you are married, have kids or have some people dependant on your salary for their living or educational needs you must get insurance.
Types of Life Insurance
Some of the most significant types of life insurance policies available on the market are: Term Insurance
This type of life insurance is for a stipulated period of time, for 5 to 35 years. The premiums are comparatively low and fixed, and are determined on the basis of your health and life expectancy. In case of the policyholder’s death, beneficiaries can make insurance claims and receive the sum Assured
of the policy. Whole Life Insurance
This is the purest form of life insurance. This has no fixed end date as it covers the policyholder till death and no survival benefit. Such a policy has fixed insurance premiums. In case of a policyholder’s death, the Beneficiary
can make insurance claims for the sum assured. Endowment Insurance
Endowment plans are a traditional type of life insurance plan. It provides insurance cover for the stipulated period of the policy. At the end of the policy term, which ideally should be 15 to 20 years, the policyholder receives the sum assured. This policy works as an investment that helps the policyholder get guaranteed returns. The money can be used to fund child’s education or for marriage alternatively the money can be used in your retirement years. Money-Back Plan
Money back plans offer you both saving and insurance cover as it provides you a percentage of the Sum Assured
during the tenure of the policy.
In addition, there are Pension
Plans and ULIPs which invests a part of the Premium
You can choose any plan on the basis of your preferences and your current life assessment – Started earning
Once you start earning, you can buy a retirement plan. Starting early will make it easier for you to accumulate sufficient wealth for your retirement years.Single with No Dependents
If you are not married and have no dependents, you don’t really need a life insurance. However, you must consider buying retirement plan to provide for your retirement years. Recently Got Married
Getting married means additional responsibilities by having children and buying a house. You have people dependant on your income hence buying insurance at this stage is a right move. Besides, insurance premiums increase if you buy it when you are older so it is advisable to buy insurance as soon as you get married. Starting a family
When your children are young they are entirely dependant on you. If anything happens to you at this stage, your spouse will have to nurture children as well as provide for their needs. It makes sense to buy life insurance
as soon as you come to know that your baby is on the way. You must take care that you buy enough insurance that will help your family maintain their living standard in case of your untimely death. If you have insurance, you must reassess your insurance needs when you start a family and buy another suitable plan if you think you do not have sufficient insurance cover.
You can also consider taking help of a financial advisor or insurance comparison websites such as www.easypolicy.com to identify a suitable insurance plan after making an assessment of your current life and economic scenario.