Millennial’s Guide to Buying Life Insurance

Many confident and achievement-oriented millennials often struggle to maintain their lifestyle due to their high costs of living. Hence, it is necessary to instil good financial habits among ourselves. The purchase of a life insurance policy can be the first step towards the journey to ensure your family’s financial security even after your demise. Read on to find a complete guide to buying a life insurance policy.

Why Should Millennials Buy Life Insurance?

Here are some reasons which will convince you to buy a suitable life insurance policy.

• Financial Security of Your Loved Ones - A life insurance policy helps your family sail through testing times by providing financial protection which becomes extremely necessary if you are the sole breadwinner of the family. The monthly death benefits offered to the beneficiary will help in carrying out their day-to-day expenses without causing any financial strain on their budget. 
  
  
• Debt/Loan Repayment - Many millennials take out student loans to complete their studies and if they die before repaying all the instalments, the burden directly shifts on their family’s shoulders. A life insurance policy helps to deal with such situations as these loans and debts can be paid from the death benefits provided to the beneficiary.
  
  
• Tax Benefits - Under Section 80C of the Income Tax Act, tax benefits are offered on the payable premium amount of your life insurance policy and policies purchased on behalf of your spouse and children.

What Type of Policy Should You Buy?

Here is a list of different kinds of life insurance policies. 

• Term Life Insurance Policy - The nominee would receive death benefits if the life assured passes away before the policy completion. The beneficiary can choose a suitable mode out of various death benefits payment methods like a lump-sum, monthly, quarterly or annually. Moreover, unlike other policies, a term insurance policy does not offer maturity benefits to the life assured if he/she survives till the term ends. 

• Whole Life Insurance Policy - The life assured is offered lifetime coverage, even if he/she lives up to 100 years. Moreover, the policy's rising cash value component can be withdrawn to avail a loan as well. However, if the life assured dies before the loan repayment, a reduced death benefit is provided to the beneficiary.

• Unit Linked Insurance Policy - The plan offers dual benefits of a life cover and investment option under one plan. The returns on the investment can help build a good corpus.

• Endowment Plan - Under this plan, dual benefits of life coverage and savings are provided. The life assured or the beneficiary is provided with maturity benefits after policy completion.
  
  
• Money Back Life Insurance Plan - A percentage of the sum assured of your policy is provided at regular intervals to help the life assured fulfil his/her short term goals. 

Factors To Consider Before Purchasing a Life Insurance Policy

The factors discussed below must be considered while purchasing a life insurance policy for yourself.

• Estimate Your Coverage - You can estimate an appropriate coverage amount after assessing your liabilities, family needs and future financial goals. 

• Decide the Policy Tenure - You can decide the tenure based on your retirement plans and the period after which your dependents won’t need your financial support.  

• Rider Benefits - Some additional riders like critical illness benefits, accidental disability benefits and accidental death benefits will make your safety net stronger.
  
  
• Policy Exclusions - There are certain death-related situations like death by childbirth or in a war or a terrorist attack, which are not covered under many life insurance policies. You should be aware of these beforehand to avoid any confusion.

Endnotes

Purchasing a life insurance policy is an excellent financial decision that comes through successfully in the face of an unfortunate event. Hence, buying a life insurance policy is advisable as soon as you start earning stable money to get the most suitable policy at affordable prices. 

Also read 

Is Life Insurance A Good Investment Option?

5 Obvious Reasons Why Your Life Insurance Claim Gets Rejected

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.