Why Life Insurance Matters

Life insurance is a key pillar of personal financial planning. It acts as a financial safety net for your loved ones in the event of your untimely death. Here’s what you should know:

• It is essential if you are a spouse, a parent of dependent children, or financially support someone like aging parents, a dependent sibling, or a life partner.

• You should also consider life insurance if you’re a self-employed professional, business owner, or have outstanding liabilities like home loans.

• Post-COVID, awareness of life insurance in India has grown, and digital platforms like LIC, HDFC Life, and Policy Bazaar have made buying policies easier.

Key Participants in a Life Insurance Policy

1. Insurer: The insurance company (e.g., LIC, ICICI Prudential) responsible for issuing the policy and settling claims.

2. Policyholder / Owner: The person who buys the policy and pays premiums.

3. Insured: The individual whose life is covered under the policy.

4. Beneficiary: The person or entity who receives the sum assured in case of the insured's death.

Types of Life Insurance in India

There are two broad types of life insurance: Term Life Insurance and Permanent Life Insurance.

Term Life Insurance (Pure Protection)

• Provides life cover for a fixed period (e.g., 10, 20, or 30 years).

• If the policyholder dies during the term, the nominee receives the sum assured.

• No maturity benefit if the policyholder survives the term.

• Most affordable option — premiums start as low as ₹400/month for ₹1 crore cover (age & health dependent).

• Now includes add-ons like:

  • Accidental Death Benefit

  • Critical Illness Cover

  • Waiver of Premium on Disability

Permanent Life Insurance (Protection + Savings)

Includes two major sub-types:

1. Whole Life Insurance – Coverage continues up to age 99 or 100.

2. Endowment Plans / ULIPs – Combines life cover with investment returns.

3. Premiums are higher but come with maturity benefits, loyalty additions, and survival bonuses.

4. ULIPs (Unit Linked Insurance Plans) offer market-linked returns with flexibility in choosing debt/equity allocation.

 Which One Should You Choose?

Term Plan (Pure Cover)	Permanent Plan (Savings + Cover)
Low premium	Higher premium
No maturity benefit	Returns at maturity
Best for families on a budget	Best for long-term wealth planning