Make sure to read this article to know how exactly life insurance covers work and how they help you manage your life insurance requirements.
There are various types of life insurance policies available in India. While most of them are very good, not every type may be suitable for you. This is why you need to assess your own requirements, understand the scope of cover that each plan offers and then choose the best option for yourself. While a term life insurance cover offers coverage for a limited period of time, whole life insurance offers a longer cover. The endowment plans combine the elements of insurance and investment.
Understanding Term Life Insurance
A term insurance plan is a plain vanilla life cover that purely offers life insurance without any frills. You stay protected for a fixed term. If you die in the middle of that term, your selected nominees will receive the sum assured and then the policy ends. If you outlive the policy time period, there is nothing you’ll get in return.
Term insurance is an inexpensive form of life insurance that purely works as a life cover. It is a pure insurance plan. It offers high coverage amounts for fixed terms of time and is among one of the most popular types of life insurance across the globe.
Understanding Whole Life Insurance
As the name suggests, a whole life insurance plan is a form of life insurance that covers you for as long as you are alive. It actually pays the sum assured to your beneficiaries whenever you die, irrespective of the age when the death takes place. Whole life insurance is more expensive than a term plan as it offers a wider and longer range of cover.
Understanding Endowment Plans
An endowment life insurance plan, also known as a traditional life insurance plan, is a platform where you can combine insurance with investment. The amount of money you pay as your life insurance premium is broken up into two parts. While one part is safely locked in a life fund, the other part is invested in the financial markets.
It earns dividends and the profits are paid out to you, either periodically or when the policy’s tenure ends. If you die while you are in the policy period, your selected nominees will receive the pre-decided death benefit along with the profits earned.An endowment plan is a very popular form of life insurance and many people buy it to keep themselves insured and also use it to save money in a safe and reliable instrument.
Also Read: Protect your life & ensure a secure future for your family. Compare top plans now
Who Benefits From Term Insurance?
Young Adults
Young adults benefit from term insurance because getting such a plan at an early age is economical. The older you get, the more the plan costs. Also, young adults have many family members who are dependent to them. They also have various financial liabilities. Since the term insurance plan offers a large cover at a rate that can be afforded easily, it becomes very suitable for young adults.
People with Loans
People with large loans or mortgages often opt for a term insurance equal to the loan amount. If they die suddenly, their family can use the death benefit from the term plan to clear the loan.
Who Benefits From Whole Life Insurance?
Older Individuals With Liabilities
If you had kids late in life, they probably will still be financially dependent on you after you retire. You have to pay for their education and wellness expenses for a longer period of time. Having a whole life insurance policy works very well in such situations.Also, if you have loans and other liabilities late into your life, cover them with a whole life policy.
Self-Employed People
People who do not have employer-provided insurance benefits can use a whole life cover to address their needs. If you are an entrepreneur without a pension fund, etc, getting a whole life cover would help you and your family members.
Who benefits from Endowment Insurance?
Breadwinners of the Family
As the primary breadwinner of the family, you need to cover your life so that if you die suddenly, your family members won't have to suffer financially. An endowment plan works very well to ensure this and so it is very suitable for the primary breadwinners of families.
People Looking to Invest Wisely
Endowment insurance helps invest in a safe risk-free manner. It also helps to save taxes. Thus, it is very suitable when you are looking to cover your life and also invest in a good and reliable way.
As you can see, the different types of life insurance benefit different people. Make a list of your needs and then decide whether you need term life insurance, whole life insurance or an endowment plan. It is not necessary that you need to choose only one type of life insurance plan in your entire lifetime. You can also choose two or more types of life insurance plans to get comprehensive coverage.
Also Read: 6 Reasons Why You Must Buy Term Insurance Early On In Life
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