How to Choose Life Insurance Plans Based on Your Income

There are a variety of life insurance plans available in India, offering different benefits. You need to consider a few things before deciding which policy to get. Here, we list down three scenarios with varied ages, incomes, and the number of dependents that will help you choose the most appropriate plan.

1. Age under 30, monthly income around INR 50,000, and no dependents

It is the best time to start building the habit of savings. As you do not have any responsibility, you can invest more into instruments that will help you build substantial wealth. Your goal should be to save first. You can then manage your monthly expenses accordingly. This way, you will be able to have more financial discipline. It is also the right time to purchase a life insurance policy. You might think that a life plan is unnecessary right now. However, having it will ensure that your parents do not have to suffer due to your liabilities if you are not there.

If you find whole life insurance policies too costly for your income, opt for a term plan. It is a pure form of life insurance policy, offering a substantial sum assured. However, it does not have any maturity benefit, resulting in a low premium. While purchasing a term plan, find one that will enable you to increase the cover in the future when you have more liabilities. 

You can also consider investing in Unit-Linked Insurance Plans (ULIPs), as they offer you life cover, investment options, and tax benefits. ULIPs help in wealth creation by giving you the chance to invest in a variety of equity or debt funds as per your choice.

2. Age between 30 to 40, monthly earnings of income INR 1.5 lakh, and married

It is wise to complete your previous financial goals before getting married. Once you start a family, your expenses will rise, and you will have to plan for a future with your spouse. If both of you have regular sources of income, it can help create stronger financial stability. So, you can save more and invest in the right policies, without having to worry about expenses.

However, if you are a single earner, it will result in more liabilities for you. First of all, you have to ensure that your spouse will be able to maintain the standard of living in your absence. This is only possible if you have a large life cover. There are different types of life insurance policies that offer substantial sum assured. For example, you can ensure the economic security of your loved ones with a term life insurance plan, which is more cost-effective compared to other life plans. If your existing term plan allows it, increase its life cover to accommodate your changing needs.  

You can also start investing more in your ULIP. By doing this, you can build a considerable fortune, in the long run, to make your retired life more comfortable and help you meet your life goals. 

3. Age over 40, income over INR 1.5 lakh per month, and two children

Having children increases your liabilities by many folds. You must start planning for their higher education and wedding as early as possible. This way, you will have enough time to build the funds. Here, investing in a ULIP can prove helpful. As you already know, ULIPs let you choose the funds where you can put your money, ensuring that you can invest according to your long-term life goals. You can also consider purchasing a whole life insurance policy at this point. It comes with a longer tenure, ensuring that your dependents stay protected for as long as you want. 

Now that you have a better understanding regarding buying a life insurance policy according to your income, it is time to search for the most suitable plan. You can do so by comparing different life policies online and determine which meets your requirements and aspirations.