Confused about which life insurance plan to choose? Here’s a handy reckoner to help you choose the right plan. While it can be a bit daunting initially, since one is on unfamiliar ground, it is actually just a matter of getting in touch with the right advisor who will demystify the seemingly complex world of insurance and educate you about the plans that would work best for you. It is imperative that you understand the terms of insurance, weigh the options carefully and make an informed decision about the coverage that is right for you and your family. Basically, life insurance and living benefits insurance can be of two types: insurance that only protect your dependents, and insurance that protects your dependents and provides a savings and investment avenue as well.

1. 'Life Insurance: All you ever wanted to know'
Confused about which life insurance plan to choose? Here’s a handy reckoner to help you
choose the right plan.
Latte, cappuccino, or espresso?With milk or without?With sugar or without? One picks and
chooses carefully to get one’s favourite cuppa customized to one’s taste. I’m sure there are
other areas in one’s life one is equally picky about, say for example, which smartphone one
flaunts, which sunglasses protect one’s eyes from the glare and so on and so forth. Yet, the
same alacrity seems to be missing when one is making one of the most major decisions in
one’s life – choosing a life insurance plan. Why? Especially when it’s the only way to
financially protect one’s dependents and still fulfill the financial goals even in the event of
one’s death.
While it can be a bit daunting initially since one is on unfamiliar ground, it is actually just a
matter of getting in touch with the right advisor who will demystify the seemingly complex
world of insurance and educate you about the plans that would work best for you. It is
imperative that you understand the terms of insurance, weigh the options carefully and make
an informed decision about the coverage that is right for you and your family. Basically, life
insurance and living benefits insurance can be of two types: insurance that only protect your
dependents, and insurance that protects your dependents and provides a savings and
investment avenue as well.
Life insurance doesn't have to be complicated, and there are lots of ways we can help you
make the right choice.
First Steps
Before you begin the process, it is vital to get in a trusted advisor and discuss your needs and
understand which options work best for you. It is important to establish what your need is and
have a goal in mind. Once that is done, evaluate which life insurance policies suit those needs
the best. Compare between policies to zoom in on the one best suited to you. Another
important thing is to evaluate the rider options. Riders are attachments to your policy which
entitle you to added benefits.
Equally important is to evaluate the company you are buying the policy from– you need to
check for customer service feedback, claims settlement ratio, financial stability, distribution
reach, payment facility provided etc. Once you understand the implications and repercussion
of what you are buying, you will be able to choose the right policy. Once you receive the
policy documents, go through the documents to review all what you have opted for. Also, re-
visit your plan from time to time as needs and goals change overtime.

2. What you need to understand:
What types of insurance are there?
Understand what types of life insurance plans are available as it is important that you find out
all you can about the kinds of cover available and understand the terminology. For instance,
term life insurance policies offer death benefit only, whereas an endowment offers death
benefit and also provides an avenue for safe and systematic savings.
What are the key drivers that make you save?
If you are looking at long term goals, then life insurance is probably the best solution as it
allows for both savings and protection. Key drivers for savings could include your children’s
education, their marriage or similar needs for which you need to think and plan long term and
invest in a plan that matures and gives you the financial reprieve when you need it most. If
you have already planned for your children then you may need to consider your own retired
life, and plan accordingly.
How much cover should I have?
The cover you need is directly proportional to your personal life situation as well as the
lifestyle you and your family want to lead. Typically, the rule of thumb is to have a cover of
10 times your annual income.However, there is no hard and fast rule here. Each one has
different goals and varying premium paying capability. One needs to be realistic though.
The first step in figuring out how much is right for you is to estimate how much your family
would need to continue its current lifestyle if your absence. It is also important to understand
what stage of life you are in – a single person has very few responsibilities; as a parent you
would have different responsibilities; and if you are approaching retirement your needs will
be vastly different.
So say, you are 38 years now and you want an income of Rs 75,000 per month when you
retire at 58 years. At the same time in case of your untimely demise you might still want to
ensure your spouse to have a hassle free retirement. How do you choose the right plan? This
is where agent advisor plays an important role. Get your trusted advisor to come in and
discuss the best options available that will give you the income you want. Understand the
implications clearly and once you are sure which plan works best – in terms of ease of
payment (premium) and benefits provided – go ahead.
How do I know it’s the right policy for me?
Once you have an estimate of how much insurance/savings you will need, it's time to think
about the type of policy that best fits your needs. Usually there is no one policy that can meet
all your life insurance needs.
You can choose a policy depending upon the risk profile and how much time you have to
attain the financial goal you are planning for – If you have a mammoth capacity for taking
investment risks and your financial horizon is over 10 years, you may choose ULIPs with an
equity bias. These policies are subject to market risks and they allocate your premium

3. amounts in equity and debt depending on the type of funds you choose ranging from equity,
debt and balanced fund depending upon you risk profile.
For the risk averse, traditional plans make the most sense. For instance, if you are a parent of
a growing child, a single plan may not serve the purpose of providing for your dependents.
You will need a plan for their future needs as well and something specific for the child's
education needs. A combination of products works the best. Likewise, you may initially have
a policy with no additional cover for disability due to illness or accidents, but later in life you
may feel the need for such a cover.
Should I throw in a cover that includes various untoward incidents that may happen?
Policies with such a cover, say for disability or critical illness, are often viewed as
‘expensive’. Some see it as money spent on policy features they hope or think they will never
use. Yet without adequate insurance, you run the risk of financial disaster should anything
untoward happen to you. The key is to buy the right type of insurance with the right amount
of cover at the right time. Don’t get sidetracked by anything – match the right insurance
cover for the right stages of your life.
Make it a habit to review your life insurance needs and change your life insurance cover
whenever there is a change in the financial situation, such as a rise in your income or a rise in
financial responsibility by way of an additional family member or the need to take care of
aging parents or a large house loan. Each of these situations calls for review of insurance
cover to ensure you are adequately covered at all times with the right insurance policy.
Here’s to a more empowered and insurance savvy you.