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LIFE INSURANCE

What Type of Life Insurance Should I Purchase?

Sumit Asrani Sumit Asrani 02 January 2018
5.0 (2 votes)

Choose the best type of life insurance from 7 different types of life insurance plans to support yourself and your family financially in times of need. Learn about different types of life insurance policies.

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Plan strategically. Plan early.

There are 7 different types of life insurance policies.

And each type of life insurance has many variants. Plus, there are more than 20 life insurance companies offering many life insurance policies with variants.

What type of life insurance should you buy?

Before we plunge into the details, let’s see if it really makes sense to buy life insurance.

So…

Is it worth to buy a life insurance?

Only a person who has won a lottery or a jackpot may think otherwise, else everyone should buy a life insurance policy. It is that straightforward.

Because:

1) Life insurance provides a life cover which is paid to the breadwinner of the family, which -

  • In case, the life assured passes away helps life assured’s family to stay financially stable.
  • Gives family financial security and peace of mind.

2) Life insurance provides an opportunity for savings and investment, which -

  • Helps you to achieve short and long-term financial goals.
  • Helps in planning child’s future and retirement.
  • Helps in building Corpus.

There are many pros of having life insurance. And there are serious cons of not having a life insurance.

If you are serious about providing financial security to your family, financial freedom to yourself, or looking for some tool to meet your financial goals at various life stages, then essentially you must have life insurance.

Based on your age, financial goals, and money you can decide which plan you should opt.

Let me help you in scrutinizing the best life insurance plan you can buy.

Different Types of Life Insurance Policies You Should Consider

1. Term Plan: A pure insurance plan to provide a complete financial safety net, in case of the demise of the breadwinner. At low premiums, you get high sum assured. This way, you make sure that your family stays financially stable, in case of your untimely demise during the policy period.

2. Whole Life Plan: Unlike, a term plan, a whole life provides a life cover until the time the life assured is alive or up to the age of 100 years. A Whole life plan offers an option of partial withdrawal. It also helps you in your retirement planning. And in case of an unfortunate death, your nominee receives the coverage amount.

3. ULIP/Endowment Plan/Money Back Plan : These are insurance plus investment plans. These are good options for investment whether you are looking to fulfil your short-term or long-term financial goals. With such plans, you can also manage to pay-off any loan or debt on maturity.

4. Child Plan: If you are married and have children, you may want to look for financial avenues to give them a good education. A child plan is a sound option to meet your kid’s needs.

5. Retirement Plan: If you are having disposal amount after providing a financial safety net to your family, and have planned your child’s future, you may want to build a corpus for your post-retirement. Retirement plan, as the name suggests, are pension plans, to support your post-retirement life stage. It gives you an opportunity of having complete financial freedom and peace of mind. You don’t have to count on your employee or anyone else to support in your old age.

How to Know What Type of Life Insurance is Best for You?

By now, you know there are different types of life insurance plans. And to find the right type of life insurance policy is nothing less than finding a needle in a haystack.

Based on your financial needs, future goals, money you can invest, and your current age there are different types of life insurance policies you can choose from.

At different age, you have different needs and financial goals. First, we will see how you age can be a deciding factor to pick up the type of life insurance policy. Second, we'll see how to select the type of life insurance plan if you are an individual with dependents or an entrepreneur running your new start-up or old bricks and mortar business.

Below is the guideline to help you to buy the most suitable life insurance for you and your family

When is the Right Age to Buy Life Insurance Plan?

As discussed, at different life stage you have different needs and as per those needs, you have to opt for a life insurance plan. However, since your age does affect the life insurance premium, for instance, in case of buying a term insurance plan, the younger you buy, the better. And so, it is advisable to buy a life insurance plan as soon as possible.

The further sections of this article will give you an insight to buy the right type of life insurance plan depending on your age.

Best Type of Life Insurance for a 30 to 40 year old

During this life stage of your life, you have more responsibilities. You are married, have kids, and maybe dependent parents. Or may even a house or personal loan.

If you are the primary breadwinner in your family, imagine your family without you or without any income flow. It would be a complete emotional and financial disaster.

Ideally, one must have a term plan.

If you already have purchased a term plan, you can look forward to opportunities of savings, child’s future plans, and so on.

In which case, you can opt:

  1. ULIPs
  2. Endowment/Money Back Plans
  3. Child Plans

These life insurance plans help you to meet your short and long-term financial goals. Plus, if you have kids and, if you are wondering about their future and education, a child plan is a good solution.

Best Type of Life Insurance Policy When You Are in Your 40s

One think of different investment opportunities. You can think of investing in different life insurance plans to meet financial goals.

In which case, you can opt:

  1. ULIPs
  2. Endowment/Money Back Plans

Additionally, you must start your retirement planning. To start building a corpus for your retirement, ideally, investing in retirement plan is a way.

So, yes, even if you are in your 40s and are thinking if it is still a good idea to invest in pension plans, then yes, it is a good idea to invest in retirement plans.

Best Type of Life Insurance Policy When You Are in Your 50s

At this stage of your life, most of your responsibilities have reduced. Perhaps, your children are heading towards becoming financially independent and loan (if any) might have been covered up to an extent or even fully paid.

You should start looking for plans to help you in post-retirement.

When you are over 50, you must look for Retirement Plans. Retire rich. Retire happy.

Life Insurance for Singles with Dependents

Singles or individuals who may have dependent parents, any relatives, or even single parents’ must have life insurance.

In such cases, it is crucial to have something to provide financial stability, a source of income, in case of an unfortunate untimely death.

With the help of a term plan, which comes at low premiums, your financial dependents are safe and secure, and it secures the living lifestyle that you have been providing them since long.

You can also look for plans that offer investment opportunities such as ULIPs, Money-Back Plans, etc.

Related Article: 7 Reasons Why Singles Need to Buy Life Insurance

Life Insurance for Entrepreneurs

Don’t mess with the business.

Your dream, your business, your source to becoming a fast-lane millionaire, is not there to die soon. Make it a legacy.

Ensure that your business continues to run, instead of seeing the gloomy night. How:

  • Get a term plan for yourself.
  • Get a Keyman Policy for yourself.
  • Get a Keyman Policy for all the key people in your organization.

Read on – Why Life Insurance is Important for Entrepreneurs

How to Choose the Best Life Insurance Plan?

  • Understand your needs – financial goals, amount of money needed to leave behind for your family’s financial security, and how much you can invest.
  • Look for the type of life insurance you want.
  • Check out the list of best life insurance companies in India and compare plans offered by them.
  • Compare different life insurance policies – compare premiums, payouts, inclusions and exclusions, life coverage, and claim settlement ratio.

Note: If you are not able to decide, seek our expert’s advice.

Hope this ridiculously simple guide helps you to choose the best type of life insurance to suit your present and future needs.

You may have queries regarding types of life insurance, how to purchase life insurance, or maybe, how the claimant can lodge a claim, just write to us in the comments section.

We’ll resolve them then and there.

Recommended Read: List of General Exclusions in Life Insurance Policies

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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.