Pick One Life - That Suits You

Often, people find it hard to decide insurance product they wish to take and find it complicated. While few of them manage to get with the jargon language of insurance brochure and buy an insurance policy, others get confused if they should have a single type of insurance policy or maintain diverse insurance policies. Well, there is no rule as to how many types of life insurance policies one should have. The insurance portfolio of a person depends on matching the right type of insurance policy that meets his or her needs. When you are aware of your needs, it is never difficult to understand as to what type of life insurance policy you need.

It is important to do self-analysis of your financial requirements before you actually purchase the insurance product. Most insurance companies have a ‘need analysis’ calculator which the agent uses during the first meeting with the customer to understand their financial needs. It is important to understand as to how you choose your portfolio once you identify your financial needs and requirements.

It is said that on an average individual buys 5-6 life insurance policies in his lifetime, but it is hard to understand the types of life insurance policies an individual buys. In an ideal condition, every individual should have a combination of at least 2 to 3 insurance policies. Any portfolio should be a mix of various products, which are of different period and sum assured, depending upon a person’s requirement.

Types of Life Insurance Policies

Here are types of life insurance policies that are must have for an individual.

1. Term Plan- This is the basic insurance plan that an individual should avail as soon as they start earning and contributing to the household for the maximum policy tenure available. With the passing time, your age and your income increases, the individual should increase the term cover by buying more term plans. The premium for this policy is less as compared to other types of policies. It is cheap if taken at an early age. The term policy guards the entire family from any possible loss in case of any mishap. Each and every member of your family must have a term plan.

 2. Whole Life Plan- If you are the only person earning in your family then you should have a whole life plan to get a life-long coverage. Your family needs to have protection and savings cover for the rest of their lives. This is an extended term plan with unlimited term. In case the policy holder dies, their family gets money.

3.   Decreasing Term Plan- This is growing popular as people nowadays are availing liabilities such as home loan. This is growing popular because if you die before repaying your loan, your loan will fall upon your family and they have to pay it on your behalf. This plan helps you take care of your loan. When you have decreasing term plan, the sum assured decreases each year along with the decreasing loan liability and hence your family will be saved from loan liability burden.

4.   Pension Plan- This plan comes helpful when you have passed your income earning age. Pension plan is the perfect solution to create income post retirement. It helps you stay independent even after your retirement and you do not have to depend on others for your expenses.

5.    Endowment Plan- This plan is useful in case of asset building with reasonable cover. This provides a low interest but offers assured returns. It is a saving instrument with life cover attached to it. Risk takers can take it as an opportunity to investment which offers guaranteed safety of capital.

6.   Unit Linked Insurance Policy (ULIP)- When investment is important as protection and returns are considered against market performance, then Unit Linked Insurance Policy (ULIP) is the best. Unit Linked Insurance Policy provide returns on the basis of market situation and death benefit to the policy holder.

Conclusion- You need to take care of the time and premium related to the above mentioned policies as all the type of life insurance policies mentioned above have different purpose and benefits. Make sure that you buy a policy that does not hamper your monthly expenses. Keep your responsibilities and lifestyle in mind while opting for any type of life insurance policy. Different type of life insurance plans cater to different needs of policy holders, for some it could be to protect their family or to ensure their child’s future or for their own retirement.

The policies ensure tax benefits on premium paid towards life insurance and sum assured received on maturity of the policy. It is a healthy saving option to invest in life insurance policies.