Life insurance is known for filling a financial gap that exists in lives. It is an all-rounder product that takes care of your different financial needs and requirement at different stages of life. To find a suitable insurance plan, all you need is to identify your need related to a life insurance plan.
Basic needs that are associated with a life insurance plan are as follows:
Act as saving for your child’s education
There are many Indians who were funding their children’s education by taking a life insurance plan. On average, child education in India costs up to Rs 12 Lakh. Thus to make an education saving is one of the biggest priorities for an Indian parent. With the help of a child insurance plan, you can easily fulfill this financial need. Such policies are known as the Unit-Linked insurance plan. It will help to build your investments to secure the educational milestones of your children.
For instance, a 35 year old parent starts saving Rs 1 Lakh per annum in a 15-year child insurance plan, for a child’s higher education, the sum assured will Rs 10 Lakh. In case, the parent dies unfortunately at the age of 40 years, then the child gets Rs 10 Lakh as a lump sum to meet immediate educational expenses.
Act as financial protection in case of major illnesses or health issues
Most Indians spend around 70% of their income on medicines and health care. In case you face any health issues, there can be a situation in which you are not able to earn income during the treatment or recuperation period. But to fulfill your family's financial need, it is a must to have an insurance plan. It is also known as critical illness cover plan. Under this, the family of the insured gets a lump sum amount on the diagnosis of a wide range of serious health-related conditions. This lump sum payout is given only when the insured is diagnosed. Hence, there is no need to submit bills and patiently wait for claims after undergoing treatment.
Critical illness plans sanctions money that you can spend on your treatment and fund your household during your no-income period as you undergo treatment. There is no restriction on how you use the claim money.
A 35-year-old professional buys a plan of Rs 10 Lakh for critical illness cover. The term of the plan is 15 years. On an annual basis, giving a premium of Rs 6961. But after 7 years, when he reaches the age of 42, he suffers from a heart attack and had to undergo heart treatment. In that case, the insurance company pays him Rs 5 Lakh, while 50% of cover continues for other ailments that he might face later, and the premium also becomes half.
Act as saving for after- retirement life
Retirement is the most beautiful and relaxing phase of life where is no work pressure. It becomes peaceful when your monthly pension is coming. All those who work in private sectors are not liable to avail of the pension benefits. It is the reason; private employees are more worried about their retirement life. In those scenarios, buying a retirement plan for you and your spouse makes you avail of the benefit of a regular pension for life.
If you start making saving for retirement at an early age, saving a big retirement corpus is possible with a retirement plan.
If you purchase a retirement plan of 1 Crore, then after retirement you can get up to Rs 7.32 Lakh annually which is Rs 61000 per month for life.