How Life Insurance Needs Are Met In Different Life Stages

How Life Insurance Needs Are Met In Different Life Stages

- Kamal Gupta

Insurance is a tool that works best as an income replacement for anyone who has financial dependents. As a bread winner, the priority should be to ensure that in case of any eventuality, the surviving family members do not go through any financial stress.

But, buying insurance is not a one-time affair. The insurance need changes as per life stage  and one should provide for each one of them.

Mere savings may not be enough!

Saving money without a plan in place may work out even worse. One needs to link his savings in any financial product to a certain goal which he or she is looking forward to achieving in the future. More so, savings through life insurance products are designed to serve the purpose only over a longer term. The design and structure are such that the costing being largely front-loaded works to a disadvantage, if exit is made early. Therefore, life insurance products, be it the traditional endowments and money backs or the market linked Ulips, need to be bought only when the goal is at least ten years away.

Traditional products suit those who are not looking for volatility and market linked returns rather are contempt with conservative returns. Most of the time, returns from them do not even beat inflation, but policyholders are satisfied with protection of capital over long term.

For those looking to bundle protection and savings and looking for higher than inflation returns, choose Ulips with larger transparency of charges, fund options and flexibility. Regular savings in products having lock-ins instil financial discipline and keep the temptation to break investments in a jiffy. Having bought say a Ulip for one’s long term goal of meeting child’s education needs, the ideal way to keep putting premiums would be in the allequity fund option.