How to Choose the Best Life Insurance That Can Meet Your Financial Needs?

Life insurance is a important financial product that ensures financial security and peace of mind to you and your loved ones. However, it is imperative to choose the right life cover policy to enjoy the right set of benefits and coverage.

For that, you need to know the different types of policies and covers, their respective features and benefits and their affordability. Thus, make sure you browse through the different plans and get acquainted with how each will fit into your financial plan to choose the best life insurance policy for yourself.

Life Insurance Cover as per Dependency

Determining the appropriate level of life insurance cover shall depend on the dependency the person has. For example, the number of earning members in a family, the individuals who depend on them, and the life expectancy of the primary breadwinner.

Moreover, it is vital to understand the financial needs of your dependents, especially in case of an unforeseen eventuality.

Also check the claim settlement ratio of the life insurance company so that your family is not inconvenienced and receives the claim money seamlessly.


Age is a primary consideration when buying a life insurance plan. If you are younger, owing to general good physical health and longer policy tenure, you can enjoy a lower premium.

For instance, a 25-year-old looking for life insurance policies will get a longer tenure and lower premiums compared to a 45-year-old (everything else being the same).

Current Income

Your current annual income is critical while choosing a life insurance plan and determining the premium. It can impact your current premium paying capacity, although it does not necessarily indicate your future earning potential.

Your life insurance policy should ideally be between 15 and 20 times your annual income. You can also review and increase your premium payments as your annual income increases. For instance, Tata AIA life insurance offers term plans with a Life Stage benefit, wherein you can increase the sum assured at critical stages of your life, such as marriage, the birth of your child, etc.

Habits like smoking and alcohol consumption

Non-smokers and teetotallers typically pay a lower premium, as people who regularly consume alcohol or smoke have a higher risk of developing illnesses. The healthier you are, the more likely you will be eligible for a lower premium payment.

Post-retirement financial requirements

Some of the best life insurance policies, like ULIPs and guaranteed returns plans ensure good returns on your investment and are perfect for your retirement financial planning. However, it is important to ascertain the amount of post-retirement income, the form (regular payouts or lump sum), etc. Also, if you need financial protection for dependents, you will have to find a policy with enough life cover.

Also, it is advisable to regular assess and adjust the post-retirement financial goals and life insurance coverage based on the inflation and changing needs.

Loans and debts

If someone has outstanding debts that they are concerned may burden their family, it’s recommended that they consider purchasing a life insurance plan where the sum assured takes into account the outstanding loan amount.

Certain life insurance policies, like savings insurance and ULIPs, offer the policyholder the option to borrow a loan against the policy’s cash value without having to mortgage their home or other valuable assets. Additionally, these policies offer a savings component that can grow over time and can be used to pay off the debt.

Add-ons or riders

Riders are extra benefits that can be added to a basic life insurance policy for an additional cost. They are optional and should only be purchased if appropriate for the individual’s needs. Riders can enhance the effectiveness of a life insurance policy.

Plan riders in life insurance include the Accidental Death Benefit Rider, Permanent Disability Benefit Rider, Critical Illness Rider, Waiver of Premium (WoP), Hospital Cash Rider, and Accelerated Death Benefit Rider.

In Conclusion

Finding the perfect life insurance policy the satisifies your financial needs and fits in your budget can get cumbersome. Ensure you check the above points and choose the best life insurance policy for your unique requirements.

And, to continue getting adequate coverage, through changing goals and inflation, regularly review and adjust your life insurance coverage.


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