Why Should I Buy a Life Insurance Plan?

policybazaar.ae

3 points·trifit··3 comments

The key is "term insurance" . I'll explain : In India, there is something called moneyback insurance , unit linked insurance plans (ULIPs) etc. All these combine the (worst) features of investments and insurance - they are too costly, don't give much returns and certainly don't give enough cover. I have advised people I know not to touch these. Instead, use a combination of term insurance + any other instrument (like equity mutual funds or bonds or even bank deposits)

Term insurance is just that : if something happens to the insured, his/her family get the benefits .

Also, in the UK at least, there are Whole Life policies which pay out whenever you die regardless of any term. Once again under the covers there is an investment plan based on how long you are likely to live.

There are also plans which aim to pay off a mortgage, so the insured sum decreases.

Term insurance is the nearest you get to other kinds of insurance - if nothing goes wrong there is no payout. However typically [1] I believe the insurer cannot cancel as long as you pay the premiums.

[1] As always, check the contract!

You might not need to. But if you have dependents that will be impacted by your death, term life insurance offers them the ability to make sure you're respectfully taken care of. Importantly it also ensures they have an additional financial cushion they need to live comfortably for some time with the loss of your income.

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