Buying a life Insurance Plan is not just about money, It's about taking the right step today to work towards your Life goals and attain peace of mind. One feels the need of buying life insurance when he or she has someone else who is dependent on their income. The best time to buy a life insurance policy is when you're young and are less susceptible to life threatening diseases or events. What's more beneficial is that the premium amount will also be lesser than someone who is older, since the mortality rates are linked to age. Also, if the life insurance policy you choose is one that grows your money, then if you start early you don't have to worry about attaining your financial goals when you're older.
Let's take an example to understand this:
Gaurav aged 30 years has taken a Bajaj Allianz Future Gain policy for a Policy Term (PT) of 30 years. Gaurav has decided to pay Rs.2500 as monthly premium for a premium payment term of 30 years. The Sum Assured chosen by him is Rs.4,50,000. Gaurav will receive Rs.2,709,720 lakhs (the bond fund {ULIF02610/07/06BONDFUNDLI116} value at assumed investment rate of 8%) OR Rs.1,350,016 lakhs (the bond fund value at assumed investment rate of 4%) on maturity.
In case of Gaurav's unfortunate death, in the 14th policy year, his nominee will receive Rs.4,92,807 lakhs (at 4%) or Rs.6,61,701 lakhs (at 8%) as death benefit***
Disclaimer: The returns indicated at 4% and 8% are illustrative and not guaranteed and do not indicate the upper or lower limits of returns under the policy. The sum assured amount and/or other benefit amount indicated, if any, is a non-guaranteed illustrative figure and is subject to policy terms and conditions and claim scrutiny.
***Death benefit would be higher of the sum assured or regular premium fund value PLUS higher of top-up premium sum assured or top-up premium fund value, if any, subject to policy terms and conditions. The death benefit is subject to the guaranteed death benefit, which is 105% of the total premiums paid including top-up premiums paid, if any, till the date of death. GST is charged based of type of the Policy, communication address of the Policy Holder. This may change subject to change in rate / state in address of the policy holder as on date of adjustment.
The premium you pay is decided by a number of factors. Some of them are your age, the younger you are, the less premium you pay. Your gender, women pay a marginally lower premium than men. Premium will also depend whether or not you are a tobacco user, if you smoke or chew tobacco, you'll end up with a higher premium amount. The tenure will also play a big role, the longer the tenure, the more the premium you pay.
Useful Tips to buy Life Insurance
Getting the best life insurance policy ultimately boils down to these four pointers.
1. Start young:
When you start young, you get the same coverage at a lower premium, thus allowing you a long-term, low-cost cover at minimal premiums. The earlier you plan for your life goal the better it is for you.
2. Calculate your needs:
Getting the best life insurance policy means getting a plan that covers all your needs and helps you work towards your life goals. Thus to get a good plan, understanding your needs first, becomes of utmost importance.
3. Ready for inflation:
An ideal life insurance policy is the one that is inflation-proof, ensuring a comfortable life to your loved ones, even 10 years down the line!
4. Go online:
Nowadays, the best life insurance plans are available online. This is because they offer the same coverage as their offline counterparts, but at differential premium rates.
The Life Cover or Sum Assured is one of the most critical aspects of a life insurance policy. This is because, in case of any unfortunate event, it's the coverage amount that will safeguard the financial interest of your family. It's important to note that the coverage amount needed will differ from one person to another depending on a few factors, some of which are stated below:
1. The number of dependents:
The coverage amount is designed to take care of your loved ones in case you're no longer around to do so yourself. Therefore, the higher the number of dependents, the higher the coverage amount needed.
2. The lifestyle expenses of your family:
When fixing on your sum assured, make sure you take into account the present lifestyle expenses of your family. This will ensure that they enjoy a comfortable life, come what may.
Take into consideration the cost of inflation: Fixing on a coverage amount based on costs today would be a dire mistake, because this amount will not support your family's expenses 10 or 15 years down the line till the next family member comes of earning age. Also, costs of education escalate faster than normal inflation rates. Hence, one must fix on a coverage amount that includes the cost of inflation.
3. Also consider the liabilities you have:
The last thing you want is for your family members to bear the burden of your liabilities. So, if you have any loans or debts, make sure the sum assured covers these costs.
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