Many of us have the wrong idea about Life Insurance policies. We’ll clear the air with this guide to understanding Life Insurance better.
Let’s begin with what Life Insurance is all about. Think of Life Insurance as a financial security blanket that will help you tide over emergencies brought about by death, disability, accident or retirement. Any of these could result in loss of income to your household. A Life Insurance policy helps here because, in the event of loss to the insured person, the Sum Assured is paid to their nominees or next of kin as a monetary benefit.
Are you confused about how much Life Insurance you may need? This depends on various factors such as
- How many dependents you have
- How much you require for your children’s education
- What kind of lifestyle you want to provide for your family
- How much you can comfortably afford
There are different types of Life Insurance. We’ll give you an overview to help you choose the perfect one.
- Term Insurance: A Term Insurance gives you protection for a set period of time. If you die or are permanently disabled, your dependents will be paid a benefit. With Term Insurance policies, if the insured person lives through the policy term, you will not be eligible for any benefits.
- Whole Life Insurance: With a Whole Life Insurance Policy, you are guaranteed lifelong protection. You can be assured that in case you die, your family will be paid a death benefit as financial security. A Whole Life Insurance is a good way to build an inheritance for your loved ones.
- Endowment Policy: An Endowment Policy is a savings-cum-insurance policy that has a specific maturity date. If anything unfortunate happens to you during the period of the policy, the Sum Assured amount will be paid to your nominees. If you survive the policy term, the maturity amount is payable to you.
- Money Back Plans: In a Money Back Plan, a certain percentage of the Sum Assured amount is paid periodically to the insured person as a survival benefit and on maturity of the policy, the remaining amount is paid to the insured person.
While you contemplate whether getting Life Insurance is a good idea, we can tell you some wrong reasons people buy Life Insurance.
And while we are at it, let’s debunk a few popular myths about Life Insurance for you.
- Insurance is for saving tax. Tax savings is not the main objective of a Life Insurance policy. It is only an added benefit of a policy. A few Life Insurance policies allow you to build a corpus for your future.
- Insurance will benefit only after my death. A Life Insurance policy protects you and your family, giving your loved ones financial security if you’re not around. Some policies also allow you to enjoy a comfortable retired life.
- Life Insurance? No, thank you. I’m single and have no children. Getting a Life Insurance policy is a good idea even if you’re single and ready to mingle. For instance, after the premium payment period on an Endowment Policy, the lump-sum amount paid to you may be useful to cover medical expenses or to build savings for your retirement.
- Another Life Insurance Policy? My Group Insurance is adequate. Some Insurance companies provide Group Term Insurance Plans for corporate companies. But if you change your job, your Group Insurance will lapse. Take control of your future. Take a second policy – your own.
Just as there’s so much more to life, so too for Life Insurance.