Life Insurance
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Life Insurance

Life Insurance is a commonly used term, yet it is seldom understood and not many are confident about choosing the best life insurance policy for themselves and their families. There are many life insurance companies and innumerable plans available, but before you opt for the perfect life insurance policy, you need to evaluate the pros and cons.

Evaluate life insurance as an investment option and think about whether you really need it. And if you do, should you choose a cheap life insurance policy or opt for the best life cover available. Which insurance company should you select? And if you already have a policy, should you buy another?

The questions that pop up are mind boggling; so to help you plan your life better, we have provided answers to a few basic ones. This will equip you choose the best life insurance company and plan for you and your family.

Simply put, life insurance is a medium of providing a financial backup for your family even after you pass on. Life insurance is an important part of a sound financial planning. Different types of life insurance plans will not only financially protect you and your loved ones incase of unfortunate event but, also help you save in a planned manner for important goals.
Life insurance companies charge you a regular premium for the cover it provides for chosen time period. Whereas, incase of ULIPs (Unit Linked Insurance Plans) part of the premium post deductions of charges is invested to earn returns.
Whether or not you need life insurance and how much, depends on whether or not you have dependent family members. But practical wisdom suggests that even if nobody relies on your income for daily living, you should still buy at least one life insurance plan which serves as a means of personal investment and tax savings instrument.

On the other hand if your income is important to your family members and your salary contributes to paying bills and loans, then you must choose the best life insurance option that you can afford. Of all plans available, Term Plan is the pure protection plan and will be cheap life insurance as well. Be sure to compare life insurance companies and the plans they offer well before settling for one.
If your employer provides you with a life insurance policy, that's a bonus. These days large organisations do offer life insurance as one of the perks, but remember that often these cheap life insurance plans may not cover enough. So always ensure that you read the fine print and are aware of how much your employer's life insurance company promises you. And if this insurance is not adequate, it is advisable to invest in a new life insurance plan as well.

Also, the insurance amount changes from organisation to organisation and different life insurance companies offer different plans and payment options which need to be kept in mind. Having one new life insurance plan tucked away for safety will help you save in the present and feel less worried about the future.
There are some important things to consider when determining the best life insurance policy and ideal policy amount for you:

  • Evaluate the financial need of your family. Is it a growing family with diverse needs and a single bread winner or a mature family with limited needs and perhaps more than one source of income? The rule of thumb is the younger a family, the more the need for life insurance.

  • Secondly, you must assess how much money you can invest in life insurance premiums on a regular basis. You may be tempted to get the best life insurance plans money can buy but it may be too expensive for you to continue paying premiums after a certain time. On the other hand if you pick a cheap life insurance policy it might prove to be inadequate to cover basic necessities in your absence. Hence, it becomes very important to evaluate your present and future needs before finalising the plan.

  • Give a thought to how long you will need the life insurance money to work for you. Whether you select a cheap life insurance cover that will sustain monthly expenses for few years or the best life insurance plan that will exist lifelong, will depend on the duration of your financial requirement.

  • As you grow in life, you should revisit the existing plan and evaluate if you need to invest in new life insurance plans. You can diversify your insurance savings with a new life insurance plan and actually schedule when and how much money your family receives.


So choose with care. You can learn more about the different life insurance plans to further narrow down your choices and select the ideal life insurance plan for yourself.

Before you get into the different kinds of life insurance plans available, our guide to understanding life insurance will help you understand the basics. Life insurance plans not only act as a protection cover for you and your family in case of ill health and untimely demise but, also doubles as a savings and investment plan to achieve set goals. So, remember that the decision of selecting the ideal Plans is very critical and instead of purchasing any life insurance plan that you are offered in haste, take time to make your decision

Life insurance plans have various options to suit different people at different life stages. Before you decide on which life insurance Plans you need to buy , you must carefully analyse why you need the Plans, what will be the sum assured and for how long.

To help you answer these questions we have prepared a step by step guide that takes you through the process of understanding and selecting the best life insurance Plans for your needs.


STEP 1: Evaluate why you are investing in life insurance plans.

  • If you have dependent family members, then life insurance plans like Protection Plans which provide only life cover will help your family tide over financial losses in tough times.

  • If you are investing to save for your child’s future or planning for your retirement, then special plans like Child Plans and Retirement Plans would be better life insurance schemes.

  • If you don’t have dependent family members, then your life insurance plans can become your channel of investment. Earlier you start saving better it is because your investments get that much more time to grow in the long run.

  • For people who don’t have any other major investments, life insurance schemes are also ideal ways to save tax.


STEP 2: Assess the total financial needs of your family.

  • In the unfortunate event of your demise, knowing the amount of monetary compensation that will be sufficient to honour your family’s financial commitments is important and must be considered while buying any life insurance schemes available.

  • If the plan is to achieve certain future goals then it is important to ascertain the future value to the goal and save for the same.


STEP 3: Assess how much you can invest regularly.

  • After you know how much you need, assess how much you can save and invest in life insurance plansplans on an ongoing basis.

  • If you expect your income to grow in the near future, then you can opt for an increasing premiumPlans where the premium increases gradually and also helps increase the sum assured.


STEP 4: Pick a Plans to suit your needs.

  • After having assessed your life insurance requirements and the amount you can save, it is time for you to evaluate different products. It is also important to spend some time researching various plans available.

  • There are a lot of insurance companies offering numerous life insurance plans. The names of plans may vary but what you need to look out for is the advantage each plan offers you over the other.

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