Life insurance plans are very specific to one’s individual needs and requirements. Hence, it becomes important for a consumer to choose a life insurance cover wisely. While planning to buy a life cover, one must estimate the size of the financial needs including education and marriage of kids, home loan, retirement savings and many more.
Here are the different types of life insurance plans and some tips to choose them:
These plans are specifically targeted at those who have dependents and are the sole breadwinner of the family.
In words of Santosh Agarwal, CBO—Life insurance, “Term plans are the cheapest form of life insurance plans available in the market with a cover for 1 crore sum assured for 35-year-old individuals available at an annual premium of Rs 10,000.”
This means, if a person is looking for protection of his/her family, without putting too much burden on his pocket, then he should go for a term plan.
Child plans and retirement plans
According to Agarwal, these plans are need-based ones that cater to specific needs like planning for a child’s education or marriage and building a sufficient corpus for retirement. So, one should choose them accordingly.
Whole life insurance plans
As per Naval Goel, CEO and Founder of PolicyX, those who want long-term protection and wealth should consider whole life plans.
These plans are considered as the best legacy planning as it provides coverage to the policyholder for the entire life, provided the policyholder pays the premiums of policy on time.
Endowment policies apart from covering the life of the insured, helps the policyholder save regularly. On surviving the policy term, the insured gets a lump sum amount that can be used to meet various financial needs.
According to Agarwal, these plans are best advised for people with a regular stream of income and who are in need of a lump sum amount after a period of time.
Unit linked insurance plan (ULIP)
ULIPs are suited for individuals with a long term financial plan of wealth creation and insurance. It gives triple benefits of savings, protection and tax savings, all in a single plan.
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