Life Insurance Plans: Offering Protection Against Death

Life is precious, more so because nobody knows when we are going to lose it! We may be enjoying time with our family one moment but may not be there the very next moment. This uncertainty throws up a vital question, what will happen to our family, our loved ones, after we are gone? Will they be able to live comfortably or will they struggle to carry on a normal life? It is to resolve such worries that one should always consider life insurance plans to secure the financial future of their family after their demise. 

The Amount Depends on Your Needs

While insurance cannot help replace your love for your family, it can certainly ensure that they do not have to suffer financially. However, it is important to remember that the monetary amount or sum assured will vary for different people, according to their age and responsibilities, and no single plan is perfect for everyone. 

The amount that you choose a policy for will depend on the current standard of living and the level desired for the family after your death. This requires consideration of the amount of assets you have and the sources of income available to your family in case of your untimely demise. Sources like cash in the bank or provident fund money may not be adequate to meet all the funding needs like education and marriage of your children, besides their day to day expenses. This gap between the available resources and the amount of funding required by your family after your death can be easily filled if you base your policy purchase decisions on careful thought. 

In India, life insurance plans can:

• Help your family survive a sudden loss of income
• Allow them to fund crucial goals, like college education or marriage expenses
• Live a normal life, without having to worry about funding the varied expenses

While deciding the amount to be bought, do remember to take into account not only your current income but also potential future income, goals for your children and family, and any other costs or liabilities that may come up in the future.

Knowing that the future of your family is secure even when you are no longer there to take care of them can give great peace of mind, besides allowing a person to enjoy life in the present. However just buying a policy is not enough. You should re-evaluate the financial needs of your family from time to time, especially at the time of major life events like marriage, the birth of a child, the purchase of a major item like a house, etc. This will help you decide whether you need to take additional policies or not. 

The good news is that with growing competition in the insurance sector in India, life insurance plans are as varied as the needs of the people in the country.

What to Consider When Buying Individual Life Insurance

Time seems to freeze when a loved one develops a serious illness and it’s normal to go through a tough emotional phase akin to grieving. But when death occurs in a family especially that of a breadwinner, there are severe financial implications and hardships in addition to the emotional trauma of losing someone. 

Individual Life Insurance Products Can Help in Your Worst Hour

According to data published by India Brand Equity Foundation, India’s life insurance sector is the biggest in the world, with about 360 million policies. Moreover, this is expected to expand at a phenomenal compounded annual growth rate (CAGR) of 12-15% over the next five years.

A life insurance policy is designed to ease life's uncertainties and difficulties. Such policy is a legal agreement between you and an insurance company that guarantees the payment of a death benefit to your chosen beneficiaries in exchange for the payment of premiums by you. The primary aim of a life insurance policy is to protect the surviving members of a family or other dependents against the loss of an individual’s income or services. To decide how much coverage is required, think about your family’s situation and how much would be required in your absence. 

Identify Your Family's Needs

When buying individual life insurance products, you need to arrive at an amount of money that you wish to be paid at the time of your demise. You would also need to name the person or persons, known as your “beneficiaries”, who would receive that money. You may also have the right to determine whether that money will be paid in a lump-sum or in a series of payments.

If you are married, you will want enough coverage to minimize your spouse’s financial needs as well as plan for your children’s future expenses, including college tuition and marriage.

Consider your annual living expenses as well as any mortgage on your home, personal or car loans, or property taxes. In such cases, you will need more cover than someone whose mortgages are fully paid off. If you do not want that your dependents to pay for your final expenses, such as hospital bills and costs associated with the last rites, ensure enough coverage beforehand.

Choosing a Company

Make sure that the insurer you are dealing with is a reputable one that will be around to protect your loved ones financially when the need arises. One important factor to consider in choosing an insurer is its financial strength. Make sure the company recognizes your financial needs and goals, and is committed to helping you meet them, by offering a wide range of life insurance plans, financial solutions and riders. 

Riders Available

Insurance companies offer riders with specific benefits, such as additional coverage against accident or disability. Riders need to be purchased separately from the basic policy. A number of riders are offered by life insurance companies, which add value to a policy. The common riders are:

• Family Income Benefit Rider: This traditional rider provides financial protection to your family in the event of your unfortunate demise. It protects the family against financial liabilities after the demise of the policyholder.

• Accidental Death and Total & Permanent Disability Benefit Rider: Accidents are common nowadays, and can impair an individual’s life and cause his death, affecting the family both emotionally and financially. This rider provides additional benefits to the insured in such an unfortunate event.

It is important for you to get only that much life insurance as you can afford to pay for in terms of premium. Opting for a life insurance products and then losing it because of your inability to pay the premiums would not be a great outcome.