Life Insurance - A Solution Today, for Tomorrow’s Needs

We often lead busy lives, carefully juggling our work responsibilities with the time we can spend doing what we love with our family. Therefore, it's important to financially protect yourself and those who are the closest to you. Life Insurance essentially acts as a contract between the insured(you) and an insurance company(insurer), where the insurer promises to pay a sum of money in exchange for a premium, in case of an unfortunate event which leads to your demise. Thus, Life insurance helps provide a sense of financial stability for your family while facilitating a lasting legacy for the people that add meaning to your lives.

Do I need Life Insurance?

With the right life insurance in place, you and your loved ones won't have to stress about money issues when it's the last thing on your minds. However, you may often ask yourself if you can afford or possibly even need to have a life insurance policy in place. But here’s some food for thought: can you afford NOT to have life insurance? Here are some burning questions you need to ask yourself:

1. How would your loved ones manage financially if the worst should happen?

2. If you care for an elderly family member, who’d look after that person in your absence?

3. Would your children be able to fulfil their dreams while they’re growing up if they could no longer rely on your income?

4. How would your mortgage be paid if you were no longer around to support your family?

5. How would your family cover their day-to-day living costs if there was no regular income flow to support them?

Different Types of Life Insurance Policies

Dealing with bereavement is tough. Whether you're looking to help protect your mortgage or outstanding loans, your loved ones, or your income, there are several types of life insurance policies that offer a range of covers to precisely match your requirements.

· Term insurance

Term insurance is the basic kind of life insurance policy. It guarantees the beneficiary or nominee, a defined amount of insurance benefit in case something untoward was to happen to them during the policy term. It is usually taken for a specified period, called the policy plan term, and the benefit under such a plan is payable only upon the death of the insured person.

· Endowment policies

An endowment policy is effectively an investment scheme life combined with an insurance plan. They not only cover the individual’s life if the unexpected were to happen, but also offer maturity benefits at the end of the term. This lump-sum can be paid out to the policy holder’s nominees in case of holder’s unfortunate demise or to the holder himself on a fixed date in the future.

· Whole life insurance

Whole life policies insurance tends to offer protection over the course of their life until the policyholder's eventual death. This proves to be the more expensive option and is mainly opted for by individuals looking to create an estate for their heirs. The coverage and possibly the premiums last for their entire life and it pays out a sum assured plus bonuses (if any) to the beneficiaries upon their death.

· Unit-Linked Insurance Policy

ULIPs combine returns, protection and tax savings into one package. A proportion of the premium paid goes towards the life insurance component while the rest of the money is invested in a common pool known as a fund, comprising of equity, debt, or a combination of both, similar to a mutual fund.

· Money-Back Policy

Money Back Policy provides the insured, life coverage over the term of the policy. Money-back plans effectively act as endowment plans as it periodically returns a certain percentage of the sum assured instead of waiting until the end of the term. If the policyholder were to meet with an unfortunate demise within the policy term, the death claim is made up of the full sum assured without deducting any of the survival benefits amounts already paid.

The Bottom Line

Having a life insurance gives you the peace of mind knowing your loved ones will have some financial security if the worst happened; and more importantly, it doesn’t have to break the bank. Premiums are available that fits any budget and the sooner you start, the better off you are.

AN Jan 04/18

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