When is the Right Time to Buy Life Insurance Plans?
The ongoing corona pandemic has made many people realize the importance of insurance. There has been a rise in the number of life insurance policies sold online as well as through agents.
The life insurance industry has seen a considerable rise in the number of life insurance policies sold, particularly term insurance. Some of the long-term investors even preferred the ULIPs in life insurance considering the fact that the market is low due to pandemics and this would be the best time to invest.
Life insurance is a contract between the life insurance company and the insured customer where the insurance company agrees to pay a defined sum assured known as a death benefit to the nominee of the policyholder in case of the sudden demise of the insured the best insurance provides claim settlement ratio & Cashless garages, IDV, Riders or Add-ons, Premiums, After Sales service, etc.
The right time to buy life insurance depends on various factors. Those factors vary from person to person, family members, and financial situations. The best time to buy a term life insurance plan is the moment you have dependents that means family such as retired parents, children, or a financially dependent spouse.
Life insurance premiums increase as you age, therefore, buying it while you’re still young could help you to save money. The premiums might be low if you buy a term plan when you’re young. A term plan is the best if you’re looking for an average cost-effective and financial protection, financial planning plan.
Coming to the point of deciding on the right time to buy life insurance, few things are to be considered here:
- The younger the better: Life insurance in particular term insurance is to be taken at a very young age. The younger the age the lower the premium. Any person who has started earning should have some form of life covers. Life insurance should be seen as an investment instead of an expense.
- Liabilities & Loans: One of the most important things to consider while taking a loan is to secure the life against any mishappenings which may lead to financial constraints for the family in case of your sudden demise. If you are taking any loan be it for House or Car or any other, it is of utmost importance to take insurance to protect the loan payment in case of your sudden demise.
- Dependents: If you are the breadwinner of the family and there are dependents on you then it is important to have life insurance. In case of your sudden demise, the proceedings from the claim will help them settle financially without facing any sudden hiccups.
- Life insurance as an Investment: Many people consider life insurance as an expense. This kind of mindset needs to be changed among the masses. Life insurance has to be considered as an investment in your own life. This investment will come in handy for protecting your family and save them from a sudden financial crunch due to your sudden demise.
Why Younger age is better
You should get insured in your 20s, or is 30s the better option because, at a younger age, you'll qualify for lower premiums. And as you get older, you could develop health problems that make insurance more costly or even disqualify you from buying a plan.
Buying life insurance at a young age has an important economic impact, much like delaying saving for retirement. The earlier it is purchased life insurance, the better.
Types of life insurance policies
Term Life Insurance
Term life insurance is an agreement between the insurance company and the insured customer in which the term insurance policy company agrees to pay a certain amount known as sum assured in case of the death of the policyholder within the term mentioned in the policy copy. If the policyholder survives the term, no survival benefit would be provided to the policyholder under the term insurance policy.
Term life insurance premium can be paid online through credit card or debit card and the policy can be issued without any physical presence of the customer in most cases and get tax benefits and exemption as per section 80D of Income Tax Act 1961. Best term life insurance products offer the highest life cover for minimum premiums.
Whole Life Insurance
Whole life insurance is the extension of the term insurance policy. In whole life insurance, the insurance coverage is provided till the death of the policyholder or till attaining 99 years of age. Since the insurance cover is for a complete lifetime, it is known as Whole life insurance. While the term insurance policy has a particular period of time for which the coverage is offered the whole life insurance policy is covered for the lifetime of the policyholder.
Unit Linked Insurance Plans
A Unit Linked Insurance Policy is a term insurance policy with Insurance coverage and Investment. ULIP policy provides death benefit- in case the policyholder expires within the policy period and also Survival benefit- in case the policyholder survives the policy term. The death benefit provided is with the premium collected under the insurance portion of the policy and the survival benefit is paid with the premium payments collected and invested by the insurance company.
Money-Back plans as the name suggests returns the money invested by the policyholder. In the money back plan, the policyholder can get a certain percentage of amounts at regular intervals, instead of getting the lump sum amount at the end of the term. It can be termed as the Endowment plan with a liquidity option.
A child plan is a type of life insurance plan that is a combination of both the investment and the insurance to ensure a safe future for your child. The child plans are typically classified into two types- Market linked and Nonmarket linked plans.
The market-linked plans are similar to that of the Unit Linked Insurance Plans where the final maturity benefit depends on the performance of the funds selected by the policyholder/the parent. Nonmarket linked plans are a form of Endowment plans which offer a fixed rate of return to the customer as a maturity benefit after the completion of the policy period.
Retirement or Annuity Plans
Retirement plans are insurance plans which help people meet their expenses after their retirement with periodic payments by the insurance company. Retirement plans can generally be of two types: One is where the policyholder will invest the amount over a period of time to attain a corpus and after which the insurance company will pay periodic installments to the policyholder after his/her retirement.
The other is where the policyholder can purchase a life insurance annuity plan by paying a lump sum amount and the insurance company will start paying the monthly amount immediately or after a period of time as selected by the policyholder.
Finally, it is advisable to “Compare and Take Life insurance” from PolicyBachat where we have a team of life insurance experts to guide you in each and every step.