Which product one buys would entirely depend on what sort of a solution one is looking at
Insurance is a security you buy. Through an insurance contract, you basically transfer an unforeseen risk to another entity by paying it a little cost for taking over the risk that you face. That's the basic principle of insurance.
But being a financial product, insurance itself has evolved over the years to cater to various needs of the market and adjust to a competitive market situation.
When one talks of life insurance, it's about ensuring financial security to the people who are dependent on you in case of an eventuality that the bread earner faces. There are two basic questions one faces when it comes to buying a life insurance cover: what is the exact coverage that one requires and which product option should one go for?
While the first depends on a whole lot of issues like one's earnings, the lifestyle one maintains, the life stage, number of dependents one has and such other things, the product option one chooses is another crucial aspect.
An insurance cover has to address five key needs in a customer’s economic life cycle, which include savings, protection, children’s future solutions, investment and retirement. Which product one buys would entirely depend on what sort of a solution one is looking at.
The first thing one has to look at is of course protection. Now, one can go for a pure protection plan by simply buying a term insurance plan, which is an inexpensive way of protecting one's family from financial burden in his absence so that it can help them sustain their lifestyle even after the bread earner is gone, just in case.
The second thing is about protecting one's dreams. We all live with dreams – dream of a house, dream of a luxury car, dream of a holiday abroad and so on and so forth. In order to realise these, it is important to have a financial goal in mind and work towards achieving it. Now one can opt for a bigger pure insurance plan to ensure that the
dreams are acheived even if one is not present to see them through.
The next option is to ensure that besides securing your dreams in case of any eventuality, you also save for the dreams in the same product. In which case you will have to go for a traditional insurance product, as term insurance plans do not offer any return.
The third thing is about securing the children's future. These plans are designed to help one build a corpus to meet major expenses of your child's life. Besides providing you life cover to ensure that your child’s dream is secured, these plans offer you a choice of guaranteed returns or flexibility to manage fund options.