It is no secret that millennials possess a unique attitude and outlook towards their life. This is also evident in their perspective on finances. As compared to their previous generations, millennials possess a greater purchasing power today, along with a wider variety of products to choose from. So, when it comes to buying life insurance, millennials have an array of insurers as well as multiple types of plans to choose from. Hence, the question arises, what would be the best plan to choose? What factors should one consider when buying the right life insurance policy? We provide the answer to these questions and more.

What is life insurance? 

First, let’s understand what life insurance is and how it works. Life insurance is a form of financial protection for your financial dependents in the event of your demise. When you insure your life under a life insurance contract, you are expected to pay a premium amount. This premium amount can be paid in monthly, quarterly, or annual instalments. You can even opt for a lump-sum payment. In return for the same, you receive the assurance of life coverage. There are various types of life insurance plans. Some popular options include:

  • Term life insurance
  • Whole life insurance
  • Unit-Linked Insurance Plan (ULIPs)
  • Endowment plans (savings plan)
  • Retirement- oriented annuity plans

Now, to determine which would be the perfect plan for you, it is important to look at some vital factors.

Factors to consider when choosing the best life insurance plan 

  • Coverage 

The most significant feature of any life insurance policy is the coverage it provides. The policy most suitable for you would be the one that meets your coverage needs without going overboard on your budget. If you are looking for pure protection, then a term policy or whole life policy would be the most ideal choice for you. Also, note that besides the life coverage, there are a ton of riders that you can opt for. These riders come at an extra cost but can prove to be worth it in times of emergencies.

For instance, if you are at a risk for a critical illness, then you should pick a life insurance plan that offers the critical illness insurance add-on. You can use a life insurance calculator to check the increase in premium if you wish to opt for these riders.

  • Your financial objectives 

Goals are important for millennials, and a life insurance policy can help you get closer to your goals financially. Therefore, before you sign the proposal form for a life policy, ensure to review your financial goals. Do you wish to retire early? Or is sending your child abroad for higher education the most important priority for you? Depending on such goals, you can select the right life insurance policy.

An annuity plan is oriented towards retirement and is a great tool to invest in if you wish to retire early. It ensures you receive a pay-out after you retire, which acts as a replacement for your regular income. On the other hand, an endowment plan or a ULIP plan can prove to be very helpful in meeting various financial goals throughout your life.  While endowment plans are savings oriented, ULIPs have an investment component attached to them. Both can serve as effective wealth creation tools, depending on your risk appetite and your goals.

  • Your life stages

Your age and life stage also determine which kind of plan would be the best for you. Some people have the misconception that only those in their 20s are millennials. However, people in their early to mid-30s also come under the category of millennials.

Some millennials might be young and at the start of their career. They may not have financial dependents yet. At this stage, a term insurance policy would be a suitable option. They may also want to opt for a high-risk ULIP plan. The premiums would be incredibly lower, as can be verified by a life insurance calculator. For those who are married, especially those with children, an endowment plan, a child insurance plan, or a low-risk ULIP, may be wise choices.

Just as all millennials are different, their life insurance needs are different as well. We hope this article has helped you understand what the ideal life insurance policy for you is.