The COVID-19 pandemic brought about many uncertainties in the life of the common person. Job losses and pay cuts were problems that riddled the working population, while India’s small businesses faced many uncertainties in their revenue share. The stock markets were also extremely volatile early on in the pandemic, with the SENSEX losing around 3,900 points on one single trading day.
In addition to this unpredictability, many families also suffered the loss of loved ones directly from the pandemic. This loss not only caused emotional hardships; it also affected the surviving members financially, because in many cases, it meant the loss of their primary or only source of income.
The importance of life insurance during the coronavirus pandemic
These uncertainties highlighted the benefits of life insurance in the midst of a crisis. Many people in the country grew more interested in life insurance that covers COVID-19 and began to take notice of how this financial product can prove to be extremely beneficial to policyholders.
The many benefits of life insurance help people tackle uncertainties in different ways. Right from offering lump sum benefits as a part of the life cover to delivering market-linked returns, there are many reasons why life insurance proved to be extremely important during the pandemic.
The three types of life insurance policies - How do they help policyholders deal with the COVID-19 impact?
If you are in the market shopping for life insurance plans, you can choose from options like term insurance, guaranteed return products and Unit Linked Insurance Plans (ULIPs). They each help policyholders deal with the impact of the pandemic in different ways -
1. Term insurance
Term Insurance is the purest form of life insurance. Term plans provide life insurance protection to the life assured for a specific term. A death benefit is paid to the nominee in case of the life assured’s death during the policy term. In addition to these advantages, term insurance is also one of the most cost-effective life insurance products, because it allows you to enjoy a higher sum assured in exchange for a premium that is highly affordable.
Term plans help policyholders deal with the impact of the pandemic by offering a financial safety net that surviving members can rely on. This helps them meet their financial obligations like loan repayments, school fees for children and even basic rent and utility costs.
2. Guaranteed return products
These products are non-participating savings plans that enable you to accumulate a corpus in a systematic manner over the long term to meet your life goals. Savings plans provide the advantages of insurance as well as guaranteed benefits. The life insurance cover enables you to secure your loved ones in your absence. In addition to this, savings plans come with the benefit of guaranteed returns at the end of the maturity period.
This kind of life insurance can also prove to be of great help during a crisis like the pandemic, because the life cover it offers can provide financial security in case of any unforeseen incidents. In addition, if the life assured survives the plan term, the guaranteed benefits turn out to be a good return on the investment.
Unit Linked Insurance Plans (ULIPs) are market-linked products that offer the two-fold advantage of investment coupled with insurance coverage. They give the policyholder the dual benefit of investing in either equity funds or debt funds (or both), while providing life insurance coverage.
ULIPs help policyholders deal with the impact of a crisis like the pandemic by making it possible to tap into the benefits of market movements. Even in the case of COVID-19, the markets recovered significantly after an initial rough patch. With ULIPs, policyholders may gain from market movements like this. Additionally, they also offer life insurance that covers COVID-19 cases too.
This goes to show how importance life insurance is in the context of COVID-19. Irrespective of the kind of life insurance you opt for, you only stand to gain in various ways. To purchase an adequate life cover for yourself and your family, remember to make use of a life insurance calculator before you choose a plan.