Life Insurance (Life Cover)
Do you have a life insurance policy? Is there a right time to insure your life? More importantly, when should you revisit how much you need?
You need a life insurance policy as soon as you start working. Your contribution to the family kitty warrants a life insurance plan. As you progress in your career, you will need more life insurance. So, it’s imperative that you review your life cover every few years according to the changes in your income and expense profile.
Your life insurance cover also needs to be evaluated at every major milestone. For instance, if you get married it’s important to protect the financial interests of your spouse. When you have a child, there’s a new financial dependent that you need to care about. Or, if your parents retire you might want to look out for their financial interests. When you take on a large loan, make sure that the burden doesn’t fall on your family’s shoulders. A life insurance policy ensures that your family is not alone even when you aren’t there.
There are many types of life insurance plans that you could choose from.
Whole Life Insurance
A whole life insurance plan covers the entire duration of a person’s life. A payout will be made to the beneficiaries upon the death of the insured.
Endowment Plans & ULIPs
These life insurance plans mix insurance and investments. In an endowment insurance plan, there are regular guaranteed returns through the course of the policy. The policyholder may also be rewarded with bonuses. Endowment plans usually offer a life insurance cover of a few lakhs. A unit-linked insurance plan or ULIP is a type of life insurance product that invests in the market. Unlike the endowment plan, returns from ULIPs are not guaranteed. ULIPs may offer a higher life insurance cover than endowment plans but are also significantly more expensive.
Term Insurance Plan
Many of us have life insurance policies and oddly remain underinsured. Most of us don’t know or realize the value of our life. In our last podcast, we deep-dived into the concept of Human Life Value and the need to be insured. A term life insurance policy offers a cover for a specific period of time at a very affordable rate. As with any life insurance plan, it becomes more expensive as one gets older. Look at the following table to get a sense of how premiums for new policies change with age.
Now you know why, when, and what kind of life insurance you need! Talk to us to take the next step to secure your family’s financial future!