LIFE INSURANCE DURING YOUR LIFE SPAN
· Life insurance requirements keep changing as you grow older.
· Remember that, generally, 35 years is the maximum term of an insurance plan.
1. Young and unattached – 25 years age
· You don’t need a life cover if you don’t have dependants.
· Buy a long-term Ulip if you don’t mind the high charges.
· Opt for the maximum cover and term offered by the Ulip plan.
· The cover can be up to 40 times the annual premium.
2. Newly married – 30 years age
· As the family grows, liabilities shoot up.
· Insurance need rises because assets are not very high.
· This is the right time to opt for an adequate life term cover
· You require life cover, especially if your spouse does not earn any income.
· Buy a term plan that should cover your outstanding loans and create a corpus large enough to sustain living expenses of your spouse upon your untimely demise.
· The cover should be roughly 100 times the monthly expense of the household.
3. New parents – 35 years age
· You require extra life cover with the arrival of children, and also need to cover your big-ticket home loans.
· You should increase your term cover depending on your assets and liabilities, and insure your working spouse as well.
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You can also consider buying a child insurance plan.
· It covers the parent and gives a dual benefit - lump sum payment on death of parent and waiver of further premiums till the end of the plan.
· However, avoid these high-cost child plans if you have other savings planned for the child.
· AYou can also opt for whole-life covers if your plan to work even after retirement.
4. Growing family – 45 years age
· You need life insurance the most at this age, as your kids are growing up and their needs are evolving.
· You might have taken a bigger home loan too.
· Your asset base also goes up, but liabilities are also rising.
· An increased term plan cover is the only way you can cover all these expenses.
· You should discard any policies which might have been bought for periodic returns and tax benefits, while continuing with the others.
· If you have a child insurance plan, use it to withdraw for your kids’ education expenses.
· Inflation too might have pushed up living expenses and the cost of future goals.
5. Nearing retirement – 55 years age
· As you enter the last phase of your working life, most of your financial goals might have been achieved through your income and various long-term investments.
· Liabilities continue to decline as loans are paid.
· You would have also saved a neat sum as your retirement corpus.
· The rise in the asset base also reduces the need for insurance.
· You now don’t need a big insurance cover any more.
· Just continue the term insurance to replace your income for the rest of your working life.
· It will augment your savings for your spouse’s living expenses.
· You should discard policies that are not fitting in your financial plan for retirement.
6. Retirement – 60 years age
· If you don’t earn any more and have no outstanding loans, you don’t need an insurance cover.
· If you have an ongoing long-term Ulip, stop paying the premium at this stage.
· Turn other insurance policies into paid-up plans too, where the cover continues even when you stop the premium.