How to Choose the Right Life Insurance Policy?

by Abhishek K. Digital Business Executive

Insuring one’s life is the most important financial decision one has to make because regardless of income, what cannot be predicted is what the future holds. What can be more devastating than having to deal with the death of a loved one, more so if he or she is the primary caregiver for the family? The least an individual can do is to secure the family's financial future by investing in a life insurance endowment plan. An endowment plan is a type of life insurance policy that covers life as well as helps the policyholder generate regular savings over a specific period to receive a lump sum on maturity. What are your other options?

1. Term Insurance Plan

Term insurance is simple- it provides death risk cover for a specified period. In case the life assured passes on during the policy period, the policy nominee receives the death benefit. It is a pure risk cover plan that offers high coverage at low premiums with the option of adding up riders to enhance coverage. There usually will be no payout if the life assured outlives the policy term.

2. Investment Plans (ULIPs)

A unit-linked plan combines both insurance and investment wherein the premium paid towards a ULIP is partly used as a risk cover (insurance), and part is invested in funds. This way one can choose and invest in different funds offered by the insurance company depending on his or her risk-taking capabilities.

3. Endowment plan

An endowment plan is a combination of insurance and saving wherein a certain amount is used for life cover and the rest is invested by the life insurance company. In case the individual whose life is assured outlives the policy term, the insurance company offers the insurer maturity benefit with periodic bonuses. Usually, endowment plans are traditional life insurance plans with lower risk on the investment component as on the returns.

4. Whole Life Insurance

A whole life insurance policy covers the life assured for an entire life, or in some cases, up to 100 years. In this type of plan, the total sum assured or coverage is usually decided at the time of buying the policy purchase and gets paid to the nominee at the time of death along with bonuses if applicable. However, if the life assured outlives 100 years, the insurance company pays out this matured endowment coverage to the life insured.

5. Money-Back Life Insurance

The money-back plan is a little unique wherein a percentage of the sum assured is paid back to the insured at periodic intervals as a survival benefit. To help the policyholder meet short-term financial goals, companies also declare bonuses from time to time.

Further plans such as child education plan and retirement plans are designed to help the individual prepare for the education of the child or plan for his/her retirement in the future. The widely popular endowment plan however helps an individual plan regular savings with minimal risk on the investment component.

At Shriram Life insurance, we encourage individuals between the ages of 30 and 55 to invest in our Assured income plan, which not only helps you secure your family financially but guarantees assured returns on maturity. By choosing a regular income option under this plan, you can claim your maturity amount as periodical payments when in need. What is more? You can also opt for additional coverage by paying a nominal amount for additional protection for events such as Accidental Death/Disability and Critical Illness.