How to Compare Life Insurance Types?

by SMCIB on Wednesday, 03 May 2023

How to Compare Life Insurance Types?

Life insurance is an essential component of financial planning, providing a safety net for you and your loved ones in the event of unforeseen circumstances. However, with so many options available in the market, it can be overwhelming to choose the right policy that suits your needs. The key to selecting the right type of life insurance lies in understanding the different policy features and benefits. And to understand each policy, there is no better way than to compare them to help meet your specific requirements. 

And in this article, we will be doing exactly that to help you make an informed choice that is perfect for you and your loved ones. 

So, let’s dive right in!

First, What is Life Insurance?

Life insurance is a safety net, a contract between you and an insurance company that promises to have your back. You pay premiums regularly to the insurer, and in exchange, the insurer agrees to assume your financial risks. But the benefits of life insurance go beyond just financial protection for your family in your absence; it is also a powerful tool for achieving long-term financial goals. Whether you are saving for retirement, planning for your child's education, or preparing for their wedding, life insurance can help you make those dreams a reality.

So, How to Choose the Right Policy for You and Your Family?

With so many types of life insurance policies available in the market, it can be overwhelming to decide which one is right for you. You will first need to figure out the type of policy you need and then compare that plan sold by different insurance providers. For instance, if you are interested in purchasing a term plan, you can compare various term insurance policies available in the market, rather than comparing it with any other life insurance plan type like a child insurance plan (because that would obviously be contradictory).

The Guide to Choosing and Comparing Life Insurance Types

Selecting the right life insurance policy is not an easy task, especially with the vast array of options available in the market. With choices ranging from term life insurance to child life insurance to unit-linked insurance plans and more, you should understand the features and benefits of each type. You should also consider factors like your income, liabilities, financial dependents, future milestones, etc., to ensure that the life insurance you choose aligns with your needs and financial goals -

? If You Want to Protect Your Family’s Financial Future
If your family members depends on your income for their financial needs, it means that they are your financial dependents. If something were to happen to you, it would be difficult for them to manage their expenses and maintain their standard of living without your income. It is thus crucial to have a financial plan in place to safeguard their future. 

The best way to do that is by investing in a term insurance policy. It provides a fixed sum of money to your family in the event of your untimely passing away while the policy is active. This payout can be used to settle any outstanding loans or liabilities, pay for their daily expenses, and ensure their financial security.

? If You Want to Invest in A Low-Risk Option and Accrue Wealth
With so many products available in the market, it can be difficult to decide where to invest your hard-earned money. If you are looking for a disciplined approach to saving, consider an Endowment Plan. This plan not only helps you accumulate wealth but also provides financial protection to your loved ones in your absence. It is an excellent low-risk investment that can help you meet your long-term financial goals.

? If Want to Accumulate Funds for Your Child’s Future
Planning for your child's future is a natural instinct that kicks in when you become a parent or are planning to start a family. As a parent, your top priority is to secure the future of your child. Investing in a Child Insurance Plan can help you achieve this goal by systematically accumulating funds for your child’s milestones like higher education, wedding, etc.

This plan is a perfect blend of insurance and investment that offers a systematic way to save and build wealth for your child's future. By choosing a Child Plan, you can rest assured that your child's aspirations and dreams will not be hindered by any financial stress, even if you are not around to support them.

? If You Want a Steady Income Source After You Retire
In case you want to ensure a regular source of income after you retire, to be financially independent even when you don’t earn, a good retirement plan can help you achieve this goal. An Annuity Plan is a smart investment option that offers you financial security during your post-retirement years. Under the plan, you pay premiums for a specific period, which get accrued into a fund. This accumulated fund will then be converted into an annuity, i.e., a steady stream of income. You will receive it periodically after you retire. With this, you can enjoy your golden years of retirement, without worrying about any financial constraints.

Note: Besides these, there are several life insurance policies available in the market that cater to different financial goals and objectives.

A Few Things To Do Before Finalising Your Policy

Once you have chosen the policy type, you need to compare the same plan offered by different insurance policies based on several other factors. Here are some things to keep in mind before you invest your money -

1️⃣ Determine the Amount of Coverage You Need
Once you have narrowed down the policy type, the next important step is to determine the amount of coverage you need. This is the sum that will provide financial support to your loved ones in the event of your untimely demise (during the policy term). And this is also the sum that will help you achieve your financial goals if you survive the policy term - under certain plans.

So, how do you go about calculating this all-important figure? Well, there are various life insurance calculators available online that can do this job for you. Simply put in details like your age, income, occupation, etc. You will get an estimate of the coverage you require. However, if you prefer a more personalised approach, you can always seek the guidance of a financial advisor.

2️⃣ Decide On Your Budget
Say you are at a fancy restaurant with an extensive menu, each dish more delectable than the other. You want to try everything, but your wallet is telling you otherwise. So, you need to pick a meal that satisfies your hunger and your wallet.

The same goes with life insurance policy as well. There are various options available, each with its unique features and premiums. It is thus essential to determine your budget before choosing a policy. You should opt for a policy that not only provides the coverage your family needs but also fits your budget.

3️⃣ Decide the Policy Tenure
The policy tenure refers to the duration that your policy will provide financial protection for you and your loved ones. So, how do you determine the ideal policy term for your needs? You can do that by considering various factors like your age, financial goals, personal circumstances, etc. It is essential to consider how long you will require coverage for and choose a policy that aligns with your specific needs. 

4️⃣ Consider Policy Features
When it comes to life insurance policies, it is not just about the basic coverage – there is so much more! You need to review policy features and specifications. For instance, you can customise your policy with riders/add-ons at an extra cost to widen the scope of coverage. Ensure you choose only those features that you feel are relevant to your unique circumstances.

Now that you have taken the time to determine your coverage needs, budget, policy tenure, and policy features, you can compare policies to find the right one. The only thing you want to keep in mind is to compare policies with the same features and benefits. This will help you find the ideal policy that not only meets your budget but also your expectations and needs.

How to Compare Life Insurance Plans at SMC?

With SMC’s free comparison tool, you can compare policy quotes, features, and more to find the best option that fits your unique needs.

  1. To get started, simply visit and click on the ‘Life Insurance’ tab.
  2. You will then be asked to select your gender and enter your full name, date of birth, mobile number, etc.
  3. Next, you will need to disclose whether you smoke or chew tobacco, your annual income, the cover amount you want to buy, the policy term, etc.
  4. After this, click on ‘Compare Quotes’ to see a few insurance plans that fit your needs.
  5. SMC also allows you to change various aspects like the policy term, cover amount, premium payment frequency, and more to see how the quotes change in real-time.
  6. You can also download brochures to learn more about the policies.
  7. Once you have found your ideal life insurance policy, click on ‘Buy Now’ to proceed with the application. With SMC, finding the perfect policy to protect you and your loved ones is easier than ever.
Don’t Forget To Research Your Insurance Provider

One of the key things to research before buying life insurance is the insurance provider. You must ensure that the insurer is reliable, offers quality services, and has a good track record of settling claims. This is where the claim settlement ratio (CSR) comes into play. It is a measure of the number of claims settled by the insurer against the number of claims received in a particular fiscal year. A higher claim settlement ratio means a better track record of settling claims. You should check that the insurer has a history of a good claim settlement ratio over the last few years. 

You should also read reviews of past and present policyholders to get an idea of their experiences with the insurer. You can check social media profiles, their forum page, online ratings, etc. to gauge the same.

Next, understand the terms and conditions of the policy. Read the policy wording carefully and assess all the details, including the inclusions and exclusions. Make sure you understand the lock-in periods and scenarios wherein claims may be rejected. This will help you avoid any surprises in the future.

And once you have completed all the necessary checks, you can confidently purchase a life insurance policy that suits your and your family's needs.

To conclude,

Comparing life insurance types is the first step in securing the financial future of yourself and your loved ones. By understanding the differences between each policy type, you can make an informed decision that syncs with your financial goals and needs.

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