Securing the family’s future is one thing that most individuals worry about in their everyday life. It is a valid concern considering the ever-increasing cost of living in today’s world. Individuals who wish to secure their family’s financial future turn towards life insurance due to the considerable range of benefits associated with it. There are different types of life insurance covers available in the market based on one’s specific requirements. Let’s take a look at the different choices available for those who wish to take life insurance coverage to secure their family’s future.
Types of life insurance
Life insurance comes in different forms based on one’s unique requirements. Based on the level of security provided, people can choose their preferred coverage option and protect their family’s financial future. The different types of life insurance available in the market are as follows:
Term insurance: Term insurance is a traditional life insurance cover that compensates the family of the insured against his/her untimely death. Since there are no maturity benefits associated with it, term insurance is also referred to as pure insurance coverage. Term insurance plans are offered for a fixed period, and the coverage stops after that period. Because of this, term insurance is also the cheapest form of life insurance coverage available.
Endowment policy: An endowment policy is one that offers a fixed sum assured amount upon the maturity of the cover or the death of the policyholder. This policy combines the benefit of both insurance and savings under one scheme. However, unlike ULIPs, endowment policies are not market-linked plans and they are not affected by market risks. If you wish to practice financial discipline by saving a fixed amount every year, you may opt for an endowment policy.
ULIPs: These are insurance policies that combine the benefits of both insurance and investment. One of the advantages of ULIPs is that they are market-linked plans and there is a potential for high returns. However, the risk is also much higher here because of the very same reason. These policies let policyholders choose their investment plans based on their risk profile. After the predetermined lock-in period, investors have the switching options to choose a different type of coverage.
Retirement plans: Most life insurers in the market provide this coverage as a variant of endowment policies. Here, investors can invest in various plans and build a corpus for their retirement. These policies must be started at a young age in order to build a corpus large enough for one’s retirement. In addition to this, people can also invest in pension plans that provide a monthly benefit following one’s retirement.
Children’s plans: As the name implies, these policies are intended for the future requirements of children. This is also a variant of endowment policy that allows saving money over a period of time in return for a fixed sum assured benefit. Parents can take these covers to build a corpus for the education or marriage requirement of their children. In case of the unexpected death of parents, the future premiums will be waived and the sum assured benefit will be provided to the children.
Whole life insurance: In whole life insurance plans, the coverage lasts till the death of the insured person irrespective of his/her age (maximum 100 years). This ensures guaranteed protection to your family following your death. Most whole life insurance plans have a fixed premium paying term but the coverage will be available for life. Since there is a specific maturity value, these policies cost higher than term insurance covers.
Money back plans: A money back policy is one that pays back a portion of the invested premiums periodically over a period of time as survival benefit. At the end of the policy term, the remaining maturity benefit will be paid to the policyholder. This periodic benefit ensures that policyholders meet their short-term financial requirements while also taking care of their insurance needs.
Benefits of life insurance
The most obvious benefit of life insurance is the financial security offered to family members in case of one’s unexpected demise. It brings you the much-needed peace of mind that your family will be taken care of when you are not around for them anymore. Securing the future of one’s family at a low annual investment is a great opportunity for everyone. Most importantly, one can also get used to the habit of saving a portion of their earnings on various life insurance schemes.
Life insurance is a must for everyone especially if there is a family to provide for. Even if you can’t spend too much on life coverage, you can opt for a term policy to protect your family from unexpected financial difficulties. Most life insurance companies offer flexible plans suitable for people with different requirements. Before signing up for a policy, you may check the options available in the market and take a decision accordingly.