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LIFE INSURANCE

Millennial’s Guide to Buying Life Insurance

Sumit Asrani Sumit Asrani 20 February 2018
3.5 (4 votes)

Life insurance is a must for everyone. Read here the millennial’s guide to invest and build corpus funds with the help of life insurance to have a financial security.

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Imagine someone denies to date or marry you, just because you have a debt.

Recently, I came across an article that revealed few shocking facts with the statistics, that stated:

More than 50% of the millennials go bankrupt before they are even married. And often they spend on shopping things online that they didn’t plan.

So, if that’s true, how do you ensure not to undergo such hardships? Youngsters spend a lot of money, majority of which is on buying unwanted and unplanned things.

Investment is the least important in the mind of millennials. Investment that would help them to reap benefits in the long run.

But,

How can you make sure you do not go bust.

How can you make sure that your dreams are not shattered?

How can you ensure your and your family’s financial well-being?

You can ensure by proper financial planning. By doing the right investment at the right time. Instead of spending money on buying the unplanned things, you can systematically invest in your better future. You may find plenty of avenues to invest to reap benefits. Of which, the right approach would be to start with a life insurance policy.

You may think, life insurance isn’t for me and that I don’t need one. Stay with me for a while, I’ll tell you why you really need a life insurance policy, why it is important and the right step to start investing.

3 Important Reasons Millennials Should Buy Life Insurance

Let’s begin with the 3 important reasons, you, as a millennial should have a life insurance before you face a financial crisis or a mid-life crisis.

1. Life Insurance is a Must

Life insurance is not like watching a series on Netflix and Amazon. But, a life insurance policy is a must. It is not only about yourself, but it is also about your family. Life is unpredictable. Unfortunate events can turn everything upside down. But life insurance is a financial safety net. Life insurance helps the life assured in case of a financial emergency when alive. It also acts like a, of financial aid to your family in case of an unfortunate eventuality like the life assured’s death.

2. Life Insurance Helps You to Build Corpus Fund Passively

Life Insurance is a way to build funds. Life insurance is a not only about getting an insurance. It is more than an investment opportunity to build funds. These funds can be utilized to fulfil your financial needs at different stages of life. For instance, you can buy a ULIP or a money back plan as an investment tool or buy a retirement plan for your retirement planning. The accumulated funds can also help to repay your debts, but it depends on the type of life insurance policy and its maturity value. But most importantly, life insurance offers a life cover and a financial net to your family members when you aren’t around.

3. Life Insurance Provides a Life Cover and a Financial Security to Your Family

Any life insurance plan, whether a whole life or term plan or even a ULIP, it provides a life cover to the life assured. However, the life coverage and the tenure will differ, depending on the life insurance plan purchased. What does it mean to have a life cover? It means, in case life assured dies during the policy tenure, the insurance company pays the death benefit to the nominee as mentioned in the policy. This way it helps your family financially in case of an unfortunate event.

Millennial’s Guide to Buying Life Insurance

What Kind of Life Insurance Should You Buy?

Life Insurance is a priceless gift you can give to your family. Life insurance protects the insured or his family against the financial losses that may occur due to an untimely death or a permanent physical disability. There are different types of life insurance plans, which provides investment and savings opportunities along with the life cover.

Types of Life Insurance

  • Term Plan - A pure insurance product that covers the life assured against an untimely death. Buy term plan to get the highest sum assured at the lowest cost. It is a pure insurance product that is meant to provide financial security on your death.

  • Unit linked insurance plan (ULIP) - Insurance + investment opportunity. It includes an investment component, you can invest money as per your risk capacity. ULIP is a long-term investment product, so opt only when you have more than 10 years of investment horizon.

  • Endowment Plan - Insurance + savings. An endowment is a traditional insurance plan. It offers a life cover and also an opportunity to start saving.

  • Child’s Plan - Long term plan for child’s education or marriage. If you are already married and thinking about family planning, buying a child plan should be on your mind.

  • Money Back - Periodic returns with insurance cover. A money-back plan is meant to meet your short-term financial goals. It offers returns as a percentage of sum assured over a regular interval of time.

To choose the right type of life insurance as a millennial, you must first figure out your short-term and long-term financial goals.

Questions You Must Ask Yourself to Buy the Right Type of Life Insurance

  • Assess your financial needs – Do you have any dependents or are you planning to settle down in the near future
  • Assess your financial goals – Are you running your own start-up or planning to do?
  • Consider inflation – There’s an increase in the cost of everything, consider a time value of money.
  • Check different life insurance plans – Each life insurance is meant to serve your different financial needs.
  • Evaluate different life insurance policies with your needs
  • Consult with a trustworthy financial advisor
  • Opt for a suitable life insurance plan and stay covered – Do not delay, the earlier you buy, the lower is the premium and the longer you stay covered.

Recommended Read :7 Reasons Why Singles Need to Buy Life Insurance

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3.5 (4 votes)
Sumit Asrani
Written by Sumit Asrani
He's a writer. His blood cells are woven with Hypergraphia, as he breathes in books, he exhales words and sneezes poetry. Captivated by the web-of-words he's trying to escape miraculously as a content writer at Coverfox.com.