How To Select A Life Insurance Policy In USA To Protect Yourself
For far too long, life insurance in India has been perceived as an optional purchase. Low awareness on what life insurance does for an individual and the perception that the product is difficult to understand have been key deterrents for Indians to benefit from life insurance policies.
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But the coronavirus pandemic has reduced these hindrances in India to some extent. There is a surge in awareness of the need of life insurance, with people realising that unforeseen events can disrupt our lives.
India’s share in the global life insurance market was 2.61% during 2018, according to the latest report by the Insurance Regulatory and Development Authority of India (IRDAI). But we may now be seeing a shift as consumers combat the challenges that coronavirus has brought forth.
Indians Evaluating Life Insurance Options More Seriously
Top life insurance companies in India are experiencing a dramatic shift in the way consumers look at life insurance due to the coronavirus crisis.
Consumers are taking a “DIY” approach to understanding insurance products, which is crucial to any financial purchase, says Anup Seth, the Chief Retail Officer of Edelweiss Tokio Life Insurance.
Edelweiss Tokio Life Insurance has witnessed a 21% year-on-year growth in individual annualized premium equivalent (APE) in the first quarter, which indicates increased customer interest. APE is a measure used for comparison of life insurance revenue by normalising policy premiums into the equivalent of regular annual payments.
India’s biggest life insurance company, Life Insurance Corporation of India (LIC), in an interview with Indian newspaper Business Standard, said it foresees fairly steady growth in premiums by the end of the third quarter.
Aalok Bhan, the Chief Marketing Officer of Max Life Insurance, has seen the demand for pure protection plans increase. More than half of the plans sold in Q1 were from the protection category. He too thinks coronavirus has helped current and potential customers realize the need for protection policies and guaranteed savings options.
Pure protection plans refer to term life insurance plans that offer protection to the policyholder for a set tenure for which the plan is taken. In the event of unexpected death during the term’s span, the policyholder’s beneficiaries are granted protection benefits detailed in the insurance plan.
Casparus JH Kromhout, MD & CEO of Shriram Life Insurance, observes the term insurance market shifting mostly online.
He notes increased interest in long-term savings products but warns an uptake would majorly depend on the economic recovery and the return of stability in income.
How to Choose a Life Insurance Policy
Many experts think of a robust life insurance policy as the first brick of the consumer’s financial planning foundation. There are various types of life insurance policies that offer definite returns to fulfil financial goals, safeguard retirement plans and assure a regular stream of income even during risky times. These positives make life insurance a must-have.
Know Which Policy Suits Your Needs
Choosing a policy that suits your requirements is important. There are different life insurance policies available in India depending on your needs. For example, your life insurance purchase could change depending on your stage of life. There are policy options for those who want to save for the future, plan financially for children, secure parents or plan their own retirement.
Knowing about the different life insurance policies is a good first step.
Term Life Insurance
A term insurance plan offers protection for a set period of time. If the policyholder dies during the term, beneficiaries are paid the policy amount. However, beneficiaries do not get paid any sum if the policyholder lives past the term of the insurance.
Whole Life Insurance
A whole life insurance provides lifelong cover.
Child Plan
Parents can opt for an insurance policy for their children that ensures financial security of the child through their stages of growing up.
Unit Linked Insurance Policies (ULIP)
ULIPs offer a combination of protection and investment. They are financial instruments designed to allow consumers flexibility and choice on how their premiums are invested.
The value of a ULIP is linked to the prevailing value of units a policyholder has invested in the fund, which in turn depends on the fund’s performance. Customers are given the choice to choose the fund and switch funds during the tenure of the life insurance policy.
ULIPs are complex financial instruments. It’s important to understand features such as the lock-in period, surrender value and surrender charges.
Money Back Plan
This policy provides a benefit based on a certain percent of the sum assured on a periodic basis. When the term expires, the balance amoun