If Life is a trapeze artist, Life Insurance is its safety net.

In ancient times, insurance served as a means to help people explore new trades. They pushed people to take risks so as to help the nation flourish.
In India, the advent of Life Insurance was in the early 1800’s when companies like Oriental Insurance were set up in Kolkata. In 1956, under the centralization of life insurance by the Government of India, Life Insurance Corporation of India (LIC) was born.

The Life Insurance Corporation of India

LIC absorbed over 154 Indian, 16 non-Indian insurers as also 75 provident societies—245 Indian and foreign insurers in all. In the 90’s with the opening up of the economy, we had several private players entering the market and hence we had an array of plans to choose from. Which is the plan that’s best suited for you? This is the all-important question,

Choosing between Plans

Insurance is the guarantee that if, God forbid, you were not there tomorrow, your family and children’s financial future is secure. Most of the time, we rush into purchasing insurance purely on the word of an insurance agent and without even reading the fine print.

Now, there are various types of insurance policies available to us. Some of these are “Whole Life Plans”, “Endowment Plans” and “Child Insurance Plans”. Today I’ll take you through the “Term Plan” and the “Money-back Policy”.

Term Life Insurance

Term Life Insurance is a policy which provides coverage for a defined period of time. If the insured passes away during the term of the policy then death benefit is payable to the beneficiary. It is the earliest form of life insurance we know of. Akin to you planting a mango sapling so that your descendants can benefit from a lifetime supply of its fruits.This policy is the most sensible and affordable one to go for.

Money-back Policy

The Money back life insurance policy provides for periodic payments during its tenure. It gives back money to policyholders at different points in time, usually 4-5 years. In comparison to planting the mango tree for future generations, here you basically go to the market and buy fresh mangoes for yourself. And if something does happen to you, your family will get maybe half a lifetime’s supply of mangoes. So, it’s understandable why this policy works out to be one of the most expensive of the lot.

It’s important to keep in mind that life insurance is set up for the benefit of your loved ones, not yourself.

Quick look at the differences

Comparing the Plans
Comparing the Plans

Always remember that every insurance company and insurance agent will try to pawn off a plan which brings in the most commission to them. It may not necessarily be the best plan for you given your age, health, financial status or tax benefits. We must also remember that insurance companies are not experts in investing. Mixing investments with insurance can be a terrible and expensive idea.

Policy Bazaar is a good place to start understanding and comparing plans for yourself. If you’re still a tad confused due to the plethora of options, it’s best to speak with a financial advisor. The fine print is what makes the difference between a secure future or a financial liability.

Drop in a comment if you’d like our help with anything.

Rohit Thomas

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