MouthShut.com Would Like to Send You Push Notifications. Notification may includes alerts, activities & updates.

For Brands

A life insurance is a security blanket you knit for your loved ones. Incase, of your death your loved ones can claim for insurance and reap its benefits.

Contrary to what several insurance agents recommend, you do not require life insurance for your whole life. You require it most when you are young and you are the sole or primary provider of your family.

Before buying a life insurance policy, it is better to know the types of life insurance that are available and choose one that best fits your requirement.

TYPES OF LIFE INSURANCE

There are two major types of life insurance, such as term insurance and cash value insurance. The term insurance is pure insurance, devoid of an investing part, whereas the cash-value insurance is essentially a term insurance policy with an investment part stitched on, which is referred to as the cash value.

  1. Whole Life Insurance

A whole life insurance covers you till you turn 99 years old and is a kind of permanent insurance that combines life coverage with investment finance. In this type of insurance, you are buying an insurance policy that pays a declared, fixed sum on your demise, and a fraction of your premium will go towards building cash value from investments made by the insurance business.

Cash value obtained is tax-deferred every year, as long as you maintain the policy, and you can have a loan against the cash buildup fund with no tax. However, the sum you pay usually does not change all through the life of the policy.

  1. Universal Life Insurance (Traditional Policies)

This is a kind of traditional insurance policy, which combines the term insurance with the money market-form investment. This will reimburse the market rate of return at the end of the policy term, you can also draw loan under these policies that are tax-deferred. To get a high return, these policies usually do not promise a certain rate.

  1. Variable Life Insurance (ULIP)

Variable life insurance is a permanent policy with an investment fund linked to a stock or bond mutual fund outlay, but here returns are not ascertained as they depend on the fluctuations of the market.

  1. Term Insurance

This is the basic insurance that provides you with all the required coverage. Hence, it is considered the best option for almost everybody.

As the name suggests, a term insurance policy is applicable for a definite time period, which can be bought for one year, 10, 20 or 30 years. As you usually need life insurance only, just choose the period that best fits the time you require coverage. If you expire during that period, your beneficiaries will get the payment, which is known as the demise benefit. If you expire after the expiry of the term, there is no payout.

Term life insurance policies usually contain a maximum issue with ages. With the increase in age, the premium levied in Term Insurance also increases as the mortality rate increases. If you cross the age of 50 years, it will get difficult for you to get insurance.

COST OF LIFE INSURANCE

Besides knowing the types of life insurance products, you are also supposed to know its price also to make your investment a lucrative and purposeful one. However, the price of life insurance depends on your health, your age and the size of the deceased benefit you would like. No surprise that the healthier and younger you are, the lesser your payment will be.

Just as an approximate, if you are a 35-year-old healthy person and buy a 20-year point term policy with a fixed yearly premium, you might pay a premium of Rs. 17,000 per year to secure a death benefit of Rs. 20,00,000. On the other hand, if you are a 50-year-old healthy person and buy the same policy, you might pay a premium of Rs. 50,000 per year. This simply shows that your premium levied is directly proportional to your mortality rate.

However, cash-value policies would cost you much higher premiums. If you are a 35-year-old healthy person and pay a premium of Rs. 17,000 per year for a term policy worth Rs, 20,00,000, you might pay a premium of Rs. 1,50,000 per year for a universal life policy worth Rs. 20,00,000, in part, as a fraction of that Rs. 1,50,000 will go into the investment part of the policy, which is a huge variation.

WAYS TO BUY LIFE INSURANCE

After knowing all the vital factors, and deciding your needs and budget, now you can start buying your preferred policies. While shopping for life insurance, explore only trusted and reliable websites to get the precise information you need.

Get an insurance policy only from an institute that is in great financial form. Before you buy a life insurance policy, inquire with the agent, or verify the website of the insurer for the financial power rating, a letter rating from main rating services of your proposed insurance provider and stick with the top ratings.

Other Related Guides

How to Choose a Bank, How to Buy a Credit Card, Trading and Investment Services in IndiaBuying Guidelines for Life InsuranceBuying Guidelines for Auto InsuranceThings to Consider While Getting a Loan

List of All Buying Guides

Buying Guidelines for Bikes, Buying Guidelines for Cars, How to Choose a College, How to Choose Boarding Schools, How to Choose a Preschool, Top Universities in India, How to Choose Computer Coaching Centre, How To Choose An Aviation Academy, How to Buy an Air Conditioner, Guidelines for Buying a Camera, Buying Guidelines For Air-coolers, Buying Guidelines For Smartwatch, Buying Guidelines for Fitness Tracker, Buying Guidelines for a Laptop, How to Choose Software for Business, Buying Guidelines for Printer, How to Choose an Employer, How to Choose a Gym, Buying Guidelines for Smartphones, Buying Guidelines for Tablets, How to Do Online Shopping, How to Choose a Bank, How to Buy a Credit Card, Trading and Investment Services in India, How to Choose Movers & Packers, How to Plan a Trip, How to Book Airline Tickets Online, How to book a hotel room, Buying Guidelines for Eye Makeup, Buying Guidelines for Face Makeup, Buying Guidelines for Lip Makeup, Buying Guidelines for Makeup Removers, Buying Guidelines for Nail Polishes, Mooc (Online Education), How to Choose Right Hair Product, Buying Guidelines For A Shampoo, Buying Guidelines for Electric Shavers & Razors, Buying Guidelines for Trimmers, Buying Guidelines for Dishwashers, Buying Guidelines for Electric Chimney, Buying Guidelines for Food Processors, Buying Guidelines for Gas Stoves and Hobs, Buying Guidelines for Induction Cooktops, Buying Guidelines for Juicers, Buying Guidelines for Kettles, Buying Guidelines for Microwave OvensTips for Modular Kitchen, Buying Guidelines For Pressure Cooker, Buying Guidelines for Refrigerators, Buying Guidelines for Toasters and Sandwich Makers, Buying Guidelines for Water Purifiers, Buying Guidelines for Air Purifier, Buying Guidelines for Generators (Genset), Buying Guidelines for Inverters, Buying Guidelines for Steam Irons, Buying Guidelines for Vacuum Cleaners, Buying Guidelines for Washing Machine, Buying Guidelines for Water Heaters, How To Choose Pest Control Products Or Agencies, Difference Between Microwave and Otg, Must Have Tools for a Business, How to Buy a Mobile Insurance, How to Buy Makeup? – Tips for Newbies, Buying Guidelines for Life Insurance, Types of Accommodations, Buying Guidelines for Bags, Buying Guidelines for Auto Insurance, Bachelors in Pharmacy and the Types of Entrance Exams, Things to Consider While Getting a Loan, Buying Guidelines for Car Speakers, Buying Guidelines for Wrist Watch, Schools – Boards & Exam Pattern, Buying Guidelines For Power Bank, How to Get Into B-schools, Hair Colouring Tips, How to Check if a Website Is Safe!, How to Choose a Good Builder Before Buying an Apartment or Home, Buying Guidelines for Fragrances

X