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Life Insurance Plans – Traditional Vs Modern

We live in interesting times – interesting yet volatile! In such times, where there are no guarantees on life, Life Insurance is the only assurance that you have to guard you and your loved ones against the unknown and the unforeseen. Insurance is essentially a pact between the insured and the insurer. The insured pays the insurer a certain amount of money at fixed intervals as a premium in lieu of which, the insurer pays a certain sum assured in the event of death or on maturity of the policy.

In the past, people would go in for rather conventional insurance policies which were typically term policies or endowment policies. The sum assured in these insurance plans are guaranteed and pre-decided. These plans mostly gave the insured insurance for life, health and sometimes linked with life long pension paying scheme. However, although these old plans provide a safety net, they are outdated owing to the spiraling cost of living. They do not yield high returns and the premium paying term is rather long.

A decade back, the younger generation was not as aware of the need of insuring oneself as today’s youth. Today, not only are we interested in insurance, we have learnt that investment and insurance can take place at the same time and with the same amount of money.

The business of life insurance has seen a paradigm shift. Today, insurance is not just a form of protection against the untimely and unfortunate incidents of life but also an active form of investment in the equity market. The whole concept has changed with more and more private sector companies jumping headlong into this arena. Gone are the days where people went in for government sector companies and played it safe. The risk appetite in general has increased hence Unit Linked Insurance Plans or ULIPs are ruling the roost. These ULIPs invest the insurers money in the market and not only promise life protection but also make your savings grow substantially.

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With increasing awareness among the common man, the modern plans have handed over the controls to the insurer. Almost all these plans can be customized as per the insurer’s needs. They have a lot of flexibility in terms of premium, term and riders. They come attached with a host of optional riders like accidental death, critical illness and premium waiver benefits. Liquidity, loan against policy and tax benefits have made them more alluring than ever before.

Life Insurance Corporation of India or LIC, as we commonly know it, was once considered the insurance giant but now it has made way for insurance biggies like AEGON Religare, Aviva, Bajaj Allianz, Bharti AXA, Birla Sun Life, Canara HSBC Oriental Bank of Commerce Life Insurance Company, DLF Pramerica, Future Generali, HDFC Standard Life Insurance Comapny, ICICI Prudential, IDBI Fortis, India First Life, ING Vysya, Kotak Mahindra, Max New York, Met Life, Reliance Life, Sahara India, SBI Life, Shriram Life, Star Union Dai-ichi and Tata AIG.

With the increasing life expectancy, it makes sense to make ample provision to live life with a certain degree of comfort. No one has seen tomorrow but we have the power of now.

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