The life insurance sector has come of age. With so many nationalized and private insurance players, there’s been tremendous growth and improved outlook towards it.
People have become aware of which policy could fit them. Various life insurance plans as well as their effectiveness has become a talking point these days. Many commercials even showcase how important it is to have one, especially if you lead a stressful life.
Introduction to Life Insurance
There are various types of life insurance policies available today, from private as well as nationalized ones. These policies may either be similar or may also differ on the basis of the tenure and the returns they offer. In India for instance, these companies are regulated by the IRDA (i.e. the Insurance Regulatory and Development Authority).
The IRDA makes sure that the insurance company is constantly monitored. It also ensures that the policies could be easily understandable. There should not be any gap between what is being offered on paper and what is finally delivered to the policyholder. The policyholder just needs to make sure that the policy is beneficial and gives a very attractive return.
There are various types of life insurance policies available in the country. These are:
- Term Insurance Policy
- Money Back Policy
- Unit Liked Investment Policy
- Pension Policy
- Whole Life Policy
Term Insurance Policy is the most popular policy today. These secure the future of the immediate family or the nominee in case something happens to the policyholder. Should the breadwinner of the family pass away, this insurance type will give financial assistance to those left behind.
In addition to the sum assured which is given, this policy also helps in getting tax benefits to the policyholder. As far as costing is concerned, these policies are cheaper, too.
Then there is Money Back Policy that keeps on paying a fixed amount to the policyholder until tenure. In case the policyholder passes away, then the beneficiary gets the sum assured.
ULIP or Unit Linked Investment Plans are where part of the premium paid goes in the monthly cover and the other part is invested in either equity or debt funds. They are similar to mutual funds, but the major difference is that they provide life insurance as well.
Pension Policies on the other hand, have also increased in popularity. This is all thanks to the need for financial independence post-retirement. That’s why people have seriously thought about getting this type of plan today.
Lastly, there is the Whole Life Policy wherein there is no particular tenure. The policyholder, in this case, enjoys the benefits floated by the paid premium for his or her lifetime.
How To Get The Right Type of Life Insurance
Life Insurance has become very important nowadays. The lifestyle of people and the strain which one goes through makes a person always feel uncertain about the future. Thus, it becomes imperative for a person to choose the right type of policy that will suit his needs.
Here’s how to zero in on the right type of insurance, as well as which factors you need to look into.
Buy Based on Need
Always ensure that the policy you are opting for suits your needs. Your buying decision should not be based on what others have said about that particular policy. Each individual has his own criteria as far as the selection goes – and one should let it be that way. If you let yourself be influenced by someone during the buying process, you may realize, over time, that you chose the wrong one after all.
Before buying, make sure to compare premiums. It may happen that the premium you are going to be paying for one policy from a particular company may differ from another. So be wise in selecting the right policy from the get go.
Set a Goal
If you have opted for life insurance for yourself and your family, this already means that you have a goal in mind. Always be clear on that. Decide for yourself the tenure at the end of which you would require funds. It may be related to anything: a child’s education, or full settlement of the mortgage, etc. The policy should always be taken considering such long term goals in mind.
Term Life Insurance is preferred nowadays. The person buying it knows that it is a long term policy and decides on it considering many factors. It is to be noted that apart from the financial security and the returns that one gets out of it, it’s a good policy from a tax benefit point of view as well.
On the other hand, the Whole Life Insurance Policy is valuable for those who value security for their entire life. There is a particular rate which is locked-in, and one has to adhere to it throughout the duration.
When it comes to customer experience or track record of the insurer, one should always look into the settlement ratio of the company. All relevant information nowadays could be found on the Web. If an insurance company’s settlement ratio is high, it should always be given preference over other options.