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Is Your Life Insurance Policy Right for You?

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How to choose Life Insurance Policy?
August 03, 2021

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Every sound financial plan includes at least one life insurance policy. Your  life insurance plan  allows you to leave behind a legacy for your loved ones. The payout provides them with some semblance of financial stability when they need it the most. Today, there are various life plans available in the market. Choosing the right one for your needs can be difficult. Before you decide which life insurance policy is ideal for you, let’s look at your options.

Types of Life Insurance

Broadly, there are two types of life insurance plans available.

  • Term Life Insurance

    A term life insurance plan provides you with life cover for a fixed period. These plans are pure insurance products and do not provide additional benefits apart from the life cover. When you purchase a term life insurance policy, you must select a beneficiary. If anything happens to you during the policy term, your beneficiary receives the promised payout. Terms plans are often less expensive even though they offer high sum insured amounts. These policies provide adequate cover for the immediate future, but they may not be ideal in the long run.

  • Permanent Life Insurance

    Unlike term policies, a permanent life insurance plan provides cover for the rest of your life. So whether something happens to you tomorrow or 50 years from now, your beneficiary will still receive the promised payout. Since these policies do not have an age cut off, they are more expensive than term plans.

  • Laddering Life Insurance Policies

    To circumvent the higher permanent life policy premiums, some individuals ladder term plans for enhanced cover. They purchase multiple term policies, each of varying lengths and with various start dates. By doing this, they can enjoy life cover for longer without breaking the bank.

How Do I Choose the Right Life Insurance Policy for Me?

So, you already have a life insurance plan . But, is the sum insured amount enough for your family? Are the premiums worth all the benefits? Here’s a look at some crucial factors you must consider before picking the right life insurance plan for your needs.

  • Group Life Insurance

    Your employer might provide you with a life insurance policy . If you think the policy is enough, you’re sorely mistaken. Most group plans, such as the one employers offer, provide lower benefits than required. Additionally, if you opt to leave the company at any point, you risk losing your life insurance cover. Purchasing another policy at a later date could end up being very expensive.

  • Your Life Cover

    The sum insured amount you pick will dictate whether your policy is the right fit for you or not. The idea behind a life insurance plan is to provide your family members with financial stability. So, the payout they receive should be enough to pay off outstanding debt or replace your lost income. You must think about what sum insured you want. Consider your current income and liabilities. Factor in inflation and figure out how much your family will need in 10 or 20 years. Subtract your assets from the amount to arrive at your estimated sum insured. If you’ve picked an amount that’s too high or too low, your plan isn’t right for you.

  • The Actual Term

    If you purchase a 20-year plan when you’re 25, you will only receive coverage until the age of 45. Today, most people enjoy life well into their 80s. You need to pick a policy that will cover you for the rest of your life or at least until you retire. Ideally, the term life insurance policy should provide you with the cover you need until you’re at least 70.

  • A Permanent Policy

    There’s a lot of talk about life insurance vs term insurance and which option is better. Both policies have pros and cons. Term plans are affordable, but the cover is limited. Permanent policies do not have a time limit but are more expensive. Take some time to evaluate all the options in the market. Make sure you get enough value for your premiums.

Benefits of Life Insurance

Life insurance plans provide your family with financial support when they need it the most. But that’s not the only reason why you should purchase one. Some life insurance policies allow you to save up money for the future, so you enjoy benefits even if you outlive the plan. Your life insurance policy also offers tax benefits. Premiums you pay and the payout your nominee receives are tax-deductible!

Purchasing a term plan is quick and easy for everybody, but especially for working women. Make sure you shop around and compare policies before buying the best one for your family’s future.Show Full Article
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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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