How to Choose the Right Life Insurance Policy for you by Age?
Life insurance is indeed a very essential need for your family. It provides you with life coverage and financial security for your family if you pass away during the term of the policy. The question might have arisen to your mind that what is the best age to buy life insurance plan. While many experts suggest that buying life cover at a younger age is always better, several other factors may affect your decision. Age concern in life insurance also depends upon your income.
So, if you want to choose the right life insurance plan by age, you must know the procedure to select the right life insurance plan.
6 Steps to Buy the Best Life Insurance Plan
No matter at whatever age you start your life insurance plan, you need to know which plan is most appropriate to fulfil your long-term goals.
For this, you need to follow a proper procedure for selecting the right life insurance by age. Here is the complete procedure for choosing the right life cover for your family:
Step 1: Identify Your Goals
First of all, you need to identify the life goals that you want to cover under the life insurance plan.
Life goals can be different for people of different age groups. Given below is a rough idea of what all can be your long-term goals at different stages of your life.
Step 2: Define SMART Goals
Once you have identified your life goals, you must now define each of them in the SMART way.
In easy words, SMART goals are those which are:
a) Specific
Your goals must be well-defined and clear. You must know what goals to achieve, how to attain them, when and why you want to attain them.
b) Measurable
They must have some parameters to measure your progress towards achievement. You must have clarity that how much you want to achieve, and how can you track your progress towards your goals.
c) Achievable
Your goals must be possible for you to fulfil. You must have sufficient resources and capability to meet your goals.
d) Realistic
Within your reach and must be relevant to your life. Your wishes may be endless, but goals are only those that are relevant to your life. So you must know whether you are really committed to reaching your goal, with your given resources and efforts.
e) Time-bound
Your goals must have a deadline for achievement. You must be very clear about how much time it will take to reach your particular life goal.
If you define your life goals in such a way as discussed above, only then you will be able to choose the right life insurance to fulfil them.
Step 3: Types of Life Insurance Plans
Based on your definition of your SMART goals, you can easily select between the following types of life insurance plans:
a) Term Insurance
This provides you with a life cover for a certain period.
b) Endowment Plan
This is a life insurance plan designed to give life cover or pay a lump sum maturity value.
c) Money Back Plan
In a money back plan, the maturity amount is paid in instalments every 5 years.
d) ULIP
This is a pure investment plan that offers you life cover as well as investment opportunities in equity, debt, mutual funds, and hybrid funds.
e) Pension Plan
This is a regular income plan that provides you financial security after retirement.
f) Whole Life Insurance
This type of life insurance plan continues till your life span.
Step 4: Additional Benefits of Life Insurance Plan
Once you have decided on the type of life cover, you must now do further research about the features of your life insurance. You must carefully look at what all riders and add-ons are available in your life cover plan. Critical illness comes as a default inclusive feature in the Canara HSBC Life Insurance Plan iSelect Smart360 Term Plan.
Other riders are:
Accidental Death Benefit (ADB),
Child Support Benefit (CSB), and
Accidental Total & Permanent Disability (ATPD)
The cost of these riders is what affects life insurance premiums.
Step 5: How much benefit of a feature do you need?
When you are adding certain riders with your life cover, you must be clear with the amount of benefit you need from each rider. Ultimately, this is what affects life insurance premiums or the cost of your life cover.
Life Insurance Plan Riders | Reasons to Add Riders to your Life Insurance Plan
Step 6: Make sure you pay a regular premium
If you want the complete desired benefits of your life insurance plan, you must regularly pay all your premiums.
Life Insurance Plans for your 20s
The 20s is the time of life when you are venturing into the real world and testing your mettle with career options. This is a stage when you do not have much responsibility for your dependents. However, you may want to start preparing for marriage, house purchase, car, or simply to build wealth.
Your Goals in the 20s
In any case, you need to invest in the following life goals for a stable financial future:
a) Financial safety from emergencies like accidents and healthcare problems
b) Retirement savings
c) Saving for mid-term goals like home purchase and marriage
d) Paying off any ongoing debt
e) Buying a new vehicle or car
The minimum age for life insurance is 18. However, at this stage, you can start with a life insurance plan that provides you maximum life cover at an affordable cost.
This is the best age to get life insurance. If you are buying life insurance in your 20s, you should consider the following life insurance plans:
a) Term insurance plan with life-stage increment option
b) Critical health and Mediclaim insurance
c) Accidental insurance cover (important if you have a vehicle)
d) Unit Linked Insurance Plan with lifetime investment option to help you save for your retirement
e) 10 -15-year ULIP for your midterm goals
These plans can help you achieve your financial goals while keeping your taxes low.
Life Insurance Plans for your 30s
In your 30s you have added responsibilities and new goals take shape. Thus, in this decade your savings must go towards these additional goals:
a) Increased term cover
b) Increase the health cover to include other family members
c) Child’s higher education and marriage goals
d) Home renovation and interior budget
e) Car or vehicle renewal and upgrade
f) You can start preparing to prepay your home loan as well
In this decade your life encounters many new financial goals. Thus, apart from upgrading the existing life insurance policies, you may need to buy a few more:
a) Term Insurance
You can increase the life cover amount in the term life cover with life stage increment option with just a request after marriage, childbirth and home purchase
b) Health Insurance
Include your spouse and child within your Mediclaim insurance, and increase the sum insured
c) Child Plans
Start investing in child education plans with goal protection options, such as Invest 4G from Canara HSBC Life Insurance.
d) ULIP
Your earlier ULIP investments for mid-term goals would become useful now. However, you need to start a few more to continue investing for upcoming expenses.
Life Insurance Plans for your 40s
The 40s is the decade when many of the things you started in your 20s and 30s will see to their conclusion. New investment options and goals also open up or become visible in this decade:
a) Children’s higher education goal is approaching
b) Your savings level is higher than ever
c) Retirement and post-retirement income (pension) becomes a visible concern
d) You may think of adding money for a second house property
In this decade keeping up with your financial priorities, you should consider the following life insurance plans:
a) 100 Year ULIP
Start another lifetime ULIP investment towards tax-free retirement pension
b) Guaranteed Savings Plan
Use these plans to fill the gap for children’s marriage goals.
c) Pension Plans
You become eligible for investing in annuity plans within this decade. Use deferred annuity plans to enhance and secure an income for your post-retirement life.
Life Insurance Plan for your 50s
This is the decade when you finally fulfil your important responsibilities and finally head to the point of freedom. This freedom, however, must have the support of your pockets. Thus, in this decade, this will become your priority.
Your life insurance choices must reflect this change in the scenario:
a) Pension Plans
Invest in guaranteed pension plans like Guaranteed income for life to secure an income stream in retired life.
b) Guaranteed Savings Plans
These plans will help you to build a corpus for your retirement age. You can use this corpus to pay off any ongoing debts or spend on modifying your house to suit your future.
c) Health Insurance Cover
Your general health insurance cover may continue as far as 65 years of age. But afterwards, you will need a senior citizen’s health cover to look after your old age healthcare needs.
Life Insurance Plan for your 60s
By now you have looked after almost all your financial needs, and pretty much set your remaining goals as well. Now you just need to sit back, relax and watch everything unfold before your eyes, perhaps even with a little financial help from you.
Your life insurance priorities will change completely at this age, and will focus more on the following:
a) Whole Life Plans for Legacy
This is the only future goal remaining for you in your 60s. Thus, preparing for this makes more sense now, if you have not already.
b) Single-Premium Savings Plans
Guaranteed Savings Plans with a single premium investment option are the best for ensuring a legacy for the next generation.
With the legacy goal set in motion, you have done your bit towards your family and progeny. Now, you can chill and enjoy life as it unfolds.