 Broadly insurance can be classified in two categories: First - Life Insurance which matures in event of death of the insured/policyholder. On occurrence of such an event the insurance company pays a sum of money assured to the nominee/beneficiary (person nominated by the policyholder). Life Insurances are of two types: Traditional Plans - which contain Endowment Plan , Cash Back Plan, Term Plan , (Term Life Insurance) and Whole life policy. And Unit-linked Insurance Plans - are of 4 types - Endowment cum Ulips, Children Plan , Retirement Plan or Pension plan and investment/saving plans. Second - General insurance. All insurance policies other than life insurance policies come under general insurance segmentation. (Also known as non-life insurance policies). These policies include Home Insurance, Auto Insurance, Travel Insurance, Marine Insurance, Theft Insurance, Office insurance and Health insurance Health insurance is most acquired policy in general insurance segment. Health insurances are of 3 types - Comprehensive Plan - which include Mediclaim and Fixed benefits plan, Accidental Insurance and Critical Care plan . |
The need for Life Insurance varies with the stages of one’s Life, Few factors are listed which can help you in identifying how much insurance is required during different stages of your Life:
1) Young professional: Since you have low responsibility in your initial years of life you can save more by paying low premium as Life Insurance premium is calculated on the basis of your age; as you grow older, premium for life cover increases & so does the cost. You should plan keeping in mind your future needs to save for setting a new house or buying a new car etc.
2) Newly Married: Since you have a responsibility now of your spouse, this is a high debt, high expenditure phase & Family is dependent on your income. If you are in this stage of life, there is a need for High Tax Planning & death benefit protection i.e. a need for temporary (Term) or Whole Life Insurance products, this the time you can save for your future needs by investing in Unit Linked Plans also.
3) Married with Kids: Now you have an additional responsibility of your child and elderly parents, apart from the need for High Tax planning you should start planning for your children’s future needs & their education. This is a high expenditure phase where you plan for your vacations but also the time for planning your Retirement. You can go for those plans that promise periodical returns which can be used for your child’s education & marriage like temporary (Term) or Whole Life Insurance products, critical illness products and long-term disability products etc.
4) Planning to retire: This is the Stage when you have reduced Debts and you need to save for your retirement. At this stage of your life you can opt for guaranteed products, you should think of those plans which will fetch you returns on your Investment, so The Endowment plans & deferred annuity products could be thought as savings for retirement provision.
5) Post Retirement: This is the stage when you need considerable savings for your retirement; you need to save for medical expenditures - for yourself and for your spouse. At this stage you are suggested to go for Single Premium Immediate Annuities & Whole Life products for wealth transfer.
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These are the various STAGES in your life when you need Life Insurance Policy.
The underlying idea is to insure yourself at the earliest because at every
stage of life you need Insurance against any financial emergency which may
occur anytime. You never know when you would fall ill or loose your earning
potential so it’s always advisable to purchase the Life Insurance early
in Life Apply
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