Life insurance is a product which gives an amount to your nominees if something happens to the person who is insured. Insurance in India started in year 1956 when government of India passed an ordinance and Life Insurance Corporation came into existence and many life insurance policies in India have been launched.
The LIC was the major player till late 1990's and after that government of India opened the Insurance sector for private companies. Now India has 23 Life insurance companies and has set of different products for the customers.
Now the questions arise:
1. Should I have life insurance?
If you have dependants who are dependent on you financially then you should buy life insurance. Buying life insurance for Kids/students etc is not a good idea.
2. If Yes- How much Life Insurance should I buy?
You should have life insurance cover of at least all loan amounts plus 10 years of expenses required by your dependants.
3. What is the best type of Plan I should buy?
Life insurance is goal orientated. If you need just cover then term or if you want to save for child then child plan or retirement plans. Also you can go for endowment plans if you want cover plus some returns.
4. Which company I should buy plans for?
Once your need is identified in terms of Life insurance amount and end product, one should compare premium another charges of same plans under different companies. Never change your amount of Life and end product for comparison.
Now- What types of Life Insurance plan options does an Indian customer have?
The types of Plan are:
1. Pure Protection|Term Plan
A pure protection plan. Under this, if you are covered for a certain amount and if something happens to you and you die for any cause, your nominee will be paid the amount. No money is returned in these plans and they come cheap. A person can cover himself for 50 lac @ 5000 rs a year at an age of 30 years.
2. Child plans
Under these plans you try to aim to get some savings for to fulfill the expenses of your child future i.e. -Education, Marriage etc. So you need to figure out how much you want to save at what year you want these returns so you can fulfill their dreams. In India context Higher education cost from 15 years now will be 40-50 lacs and one should try aiming for that amounts to fund child education etc.
3. Retirement Plans
Aim to give you a corpus at the year of retirement or sum monthly income after you are retired. Invest early in such plans if you want to pay small amount in your working life but it required in the new context of Indian culture where nuclear families are a big reality.
Once a very popular product among life insurance distributors and use to sell a lot. With new guidelines not very popular and under this your premium is largely invested in stock market and you are told you will get better returns. One should understand that Life insurance is more about cover than an investment product.
5. Endowment Plans
These plans give you a cover and small return or return of premium at the end of your policy. Good for people who want some returns and covers. Which Company plans are best? In India they are 23 companies and LIC is a leader.
The other companies are listed here:
ICICI Prudential Life Insurance
Max Life Insurance Co. Ltd.
PNB Metlife India Insurance Co. Ltd.
Bajaj Allianz Life Insurance Co. Ltd.
Bharti-Axa Life Insurance Co. Ltd.
HDFC Life Insurance Co. Ltd.
Aegon Religare Life Insurance Co. Ltd.
Kotak Mahindra Old Mutual Life Insurance Co. Ltd.
Future Generali Life Insurance Co. Ltd.
SBI Life Insurance Co. Ltd.
Shriram Life Insurance Co. Ltd.
TATA AIA Life Insurance Co. Ltd.
Aviva India Life insurance Co. Ltd.
IDBI Federal Life Insurance Co. Ltd.
Sahara India Life Insurance Co. Ltd.
ING Vysya Life Insurance Co. Ltd.
Star Union Dai-ichi Life Insurance co. Ltd.
Canara HSBC Life Insurance Co. Ltd.
DLF Pramerica Life Insurance Co. Ltd.
Birla SunLife Insurance Co. Ltd.
Reliance Life Insurance Co. Ltd.
India First Life Insurance Co. Ltd.
Edelweiss Tokyo Life Insurance Co. Ltd.