Sponsored: Life Insurance - Why one size doesn't fit all

Our uniqueness is one factor which differentiates us from the rest, ensuring that we stand out, even in a crowd. We all wish to be special and one-of-a-kind, pushing ourselves to be better than the rest. We see this across multiple instances in our life, yet when it comes to a few life-changing events we opt to go with the flow, forgetting that we are special and have specific needs.

One example where this happens regularly is related to the purchase of life insurance policies. Let’s face it, while we value our life, we often forget to put a value on it.

India’s life insurance penetration has seen a steady improvement over the years, but most of us are still unaware of the benefits of life insurance, choosing to buy it only for the sake of having a policy.

Insurance, be it life or health insurance, is customisable, and the concept of one size fits all doesn’t do justice to you, the policyholder.

Why you should customise your insurance policy
There are two primary reasons why one should customise his/her life insurance policy.

Specific goals – Your goals might be different from that of your neighbour. You might have a goal to retire at a specific age, with sufficient funds to travel the world after that. Or you might have a goal to educate your child in a top university.

Whatever the goal may be, it is possible to fulfil it only if there are adequate resources. Insurance companies offer a range of products designed to meet a particular goal. For example, one can choose a retirement plan to ensure that he/she can retire without worrying about money. Or one could invest in an endowment policy to secure the future of his/her child. Alternately, one could invest in unit-linked insurance plans which offer decent returns, helping one beat inflation.

Family obligations – Our family is important to us, there is no doubt about it. A number of us live for them. Imagine the plight of our loved ones if something were to happen to us. They would be devastated for sure. Now, human beings aren’t immortal and death is something which each of us ought to be prepared for. While we might not be able to prevent the inevitable, we can plan for it, ensuring that even if we are not there physically, we can offer assistance to our loved ones.

Individuals with multiple dependants might have to increase the cover amount, in comparison to someone who has a single dependant. Similarly, one has to plan the future of his/her family through the purchase of the right insurance plan.

One can understand the importance of these two points through the example of three people, Jay, Ram, and Vicky.

Jay and Vicky are both 32 years old, working in the same organisation and earning the same amount of money. Ram, who is their boss, is around 55 years old, earning much more than them.

Now, would it make sense for the three of them to purchase the same insurance policy? Some might say Yes, for a life insurance policy will protect the interests of their loved ones, irrespective of what the policy entails, right?

Now, how about we go a bit deeper and try to understand each one of them. Jay is single, with only a dependant mother to take care of. Vicky has been married for the last 7 years and has two children. Additionally, he also looks after his parents. Ram has two children who are independent, with his wife being the only dependant.

Also, Jay has an extremely unhealthy lifestyle, smoking and drinking on a daily basis, with almost no exercise whatsoever. He also has a history of previous illnesses.

Vicky follows a moderate lifestyle, with no serious illnesses in the past. Ram has suffered a stroke in the past and takes medication on a regular basis.

Given these points, would it still make sense for the three of them to have the same policy? No, it wouldn’t.

Each of their needs is different, requiring a policy which meets their expectations.

Jay could purchase a ULIP to meet his requirements. Additionally, he might add riders which cover health issues. Vicky might choose to invest in a whole life policy, adding riders to enhance the cover. Ram, on the other hand, might choose to buy a retirement plan which provides monthly returns, covering his spouse in it as well.

A life insurance policy might not have the power to grant immorality, but it does have the ability to be a lifesaver. Choosing wisely ensures that your love is felt even in your absence.