Do you need to buy life insurance? What Life Insurance Is Right For You If Needed? What is the appropriate amount of coverage?
I will try to answer all insurance-related questions you have in mind. I will also tell you about the life insurance I got and why I chose this policy as the best policy out of thousands. Let’s start, first of all, do you need to buy life insurance? To find out, you must ask yourself: is someone counting on you? Does anyone live off their income? For example, your son, daughter or parents. If your answer is “no,” you do not need to purchase life insurance. But if your answer is “yes”, then you should buy life insurance. Because, with the number of diseases and accidents increasing day by day, anyone can die at any moment.
So when you are not here, it is your most important responsibility to make sure that those who depend on you will not have any problems, at least in terms of money. Now let’s move on to the next question, How many years of coverage should I buy? Up to 60 years, 70 years or for life, that is, every time you die, your family will get the money. You have to ask yourself the same question a little differently to find out how many years of coverage to buy.
How old do you expect to be dependent on you?
For example, suppose you are now 30 years old and your only dependent is your newborn child. His wife is currently working, so she does not depend on his income. So when he turns 60, your son will be 30 and at this point he will start making money on his own. So you can hope that you are no longer dependent on your earnings. So in this case, you have to buy coverage up to 60 years. So if you die before the age of 60, your family will get the insurance money. Now the next question is how much coverage should you buy? Here, the general rule is that the amount of coverage should be at least 20 times your annual income. For example, if your annual income is five thousand rupees.
Then you should get minimum coverage of Rs 1 crore. The next question is, at what age should you buy life insurance? The earlier you buy, the higher your profit. The reason is, let’s say you’re 25 years old today. If you buy life insurance today, because for the next 10 years your risk of dying is very low, the premium, that is, the amount of money you have to pay the insurance company every month or year, will be much lower. The premium is fixed for life at the time of contracting the insurance. So today, at the age of 25, if you buy Rs 1 crore life insurance coverage for up to 60 years you pay only Rs 30 per daily premium. Then for the next 35 years, you will have to pay Rs 30 a day to the insurance company.
This amount will be fixed for life. So after 20 or 25 years, paying just Rs 30 a day will cost you nothing. But if someone in their 40s wanted to buy the same insurance coverage, they would have to pay a much higher premium because the risk of dying in the next 10 years is high for them. And that is why, although now I do not count on me, but soon there will be, so I have already bought my life insurance. So I have to pay lower premiums. Now let’s move on to the last question
what type of life insurance should I buy?
There are different types of life insurance,
1. Term plan: An example of this type of insurance I was telling you about. That is, if you die within a period of 40 years or a period, from the age of 25 to 65, the insurance company will pay the amount of coverage to your family. But if you die at 66 or 70, your family won’t get a penny.
2. Whole life plan: That is, every time you die, even if you die at the age of 100, the insurance company will pay the amount of coverage to your family. But here the premium is very high.
3. ULIP Plan – In this case, your money will be invested in the stock market and you will also get lifetime coverage.
4. Endowment Plan – In this case, please indicate if you accept 65-year lifetime coverage.
But continue to live even after 65, you will get the full amount you paid in premiums to the insurance company plus interest. Among these different types of life insurance, the best temporary plan. Now you may ask, “But sir, in the case of an interim plan, if I didn’t die at this age, the insurance company wouldn’t pay a penny. But in the endowment plan, even if I didn’t die within this lifetime, I would still get all the money I paid.” As premium for the insurance company plus interest.
Why do you say the plan term is better?
The reason is that in the plan term you will get maximum coverage with a minimum premium of Pe premium will be much higher. It may not be possible for you to afford that. The main purpose of insurance is not investment but security. The funny thing is that if you go to any bank or an insurance agent to buy life insurance, they will all suggest you to buy Endowment plan. Why Because it will benefit you the most? Not at all! Because it will be most beneficial for the agent. And notice one thing, they will tell you something like “your money will be doubled in 12 years or 14 years”.
They will never tell you the interest rate that you will be getting. Because if you back-calculate, you will find that you will be getting around 5-6% annual interest only if your money gets doubled in 12-14 years. So instead of that if you choose a term plan then you will get maximum coverage at a minimum premium and the money you will save from the premium can be invested in FD, mutual fund, gold, real estate, stocks as per your choice. In this way, you will get much more than 5-6% return annually.
So in the case of life insurance term plan is the best. Now the last and final question, from which company should you buy life insurance? I will tell you that one by one from this chart. This chart is a comparison between all the insurance companies based on the annual report of IRDAI of 2018-19. Before buying life insurance from a company you must check these 4 things. The first factor is the total no of policies issued. The higher the number is, the better it is. Next benefit amount. That is how much money the insurance company has paid to those who claimed their insurance.
The higher the number is, the better it is. Next claim settlement ratio. That is how much percentage of claim has been approved by the insurance company. If this is above 95%, then only it can be said well. Next is the amount settlement ratio. That is how much percentage of the total claim amount the insurance company has paid. If the difference between the claim settlement ratio and amount settlement ratio is more than 5%, then it is better to avoid such companies. So if you compare based on these attributes, you can clearly see that LIC is far more ahead of any other company. So personally, I will suggest you to buy life insurance from LIC company. And more specifically I will suggest you to buy LIC’s Tech Term Plan (854). Because as it is available only online, the agent’s commission, in this case, is completely zero. So you will get a large amount of coverage at a very minimum premium.