Introduction
Well, not all of us can afford to live a luxurious life that comprises plush holidays or continue living under the shadow of our parents or guardians. Here, you must plan your life ahead of you. Unless you have saved money for enough number of years, you can be considered a middle-class citizen. Whether you belong to an advanced economy or a developing economy, you have enough money to just pay your bills or spend a portion of your money on dining out or indulging in some kind of recreation. And then, comes the time to receive your next paycheck.
Therefore, most of you out here would be living on a paycheck-to-paycheck basis indeed. Then, how would you be able to plan for contingency situations that do not give you an email’s notice before occurring? It could be a sudden hospitalization of your mum or dad.
On this parlance, let us see the Best Life Insurance To Buy For Middle-Class Investors. Helping you get started further here:
Term Life Insurance
Term Insurance is the most straightforward and affordable life insurance option that you can possibly think of. You get a complete form of life insurance coverage over the designated term for which the policy has been signed up. The term can be 10/ 20/ 30 years.
When the policyholder dies within the term of the policy, then his nominee gets the death benefit cheque or DD from the insurance service provider.
Else if the policy ends and no death occurs, then the policyholder gets the term amount and interest is calculated for the number of years in lieu of the term and the final amount gets credited as wireless settlement or as a DD that is issued in the name of the primary policyholder as such.
This is a perfect policy that is affordable by most of middle-class families as the premium amounts are done on an affordable platter. The policy has no complicated features and is easy to understand.
However, the term insurance does not have a cash value benefit as you have a term based on which the policy coverage amount and interest payouts are being calculated. You get interim payments in the form of interest earnings with some insurance providers.
The best part with term insurance polcies is that they can be customized for a period of time until kids finish their education or the mortgage loans or outstanding amounts are repaid in full. And this lump sum can be a life saver for most middle-income households out there.
Whole Life Insurance
This is a type of life insurance that provides insurance benefits that can last one’s entire lifetime. However, as the insurance service provider insures the primary policyholder for the entire lifetime, the premiums that are levied to you can be higher as compared to term life insurance policies.
However, a whole life insurance policy has a cash value component wherein the interest gets compounded annually. When you allow the cash value to grow over a number of years, you can expect an exponential lumpsum over what you receive via traditional insurance policies.
Whole Life Insurance also offers flexible loan facilities wherein you can take some amount from the cash value component and the interest would be calculated on the remaining part of the actual policy coverage amount as such. Therefore, you can borrow money or cash out your impending financial obligations as and when the need arises. Plus, the premiums remain the same throughout the policy.
In a nutshell, this is a type of insurance policy that suits middle-class citizens who can afford higher premiums but need savings cum investment components attached to the policy as such.
Universal Life Insurance
Universal Life Insurance is a type of permanent life insurance that also provides you with flexible benefits to improve the cash value component of your investment portfolio.
This is a policy that is more flexible and more conducive over a whole life policy. As it allows policyholders to redeem their death benefits against premiums, it also allows the cash value component of the policy to accrue interest. If the interest goes untouched, the principal value also increases on a compounded basis indeed.
Here, you have complete flexibility to change premiums and policy assurance amounts to match your changing financial circumstances. And, the policy grows its cash-value component based on the interest rates that stand signed up for.
However, as the cash value component is linked to changing interest rates, the amount or value keeps on changing and does not remain constant. And, this is slightly difficult to learn or understand as compared to a simple whole life insurance policy.
In a nutshell, universal life insurance coverage ideally suits middle-class families primarily because you can adjust premiums or cash value benefits to suit your impending financial goals and obligations.
Final Expense or Burial Insurance Policy
This is a type of lifetime insurance coverage that is primarily designed to take care of expenses with which you can take care of the last life moments of your loved ones. The policy covers final rites and burial rite expenses seamlessly indeed.
Here, the policy offers a smaller amount of death benefits that are easier to qualify for or apply for.
In other words, without the need for complicated paperwork or medical examination rounds, senior citizens can get their final expense policies approved by most insurance service providers as the policies are specifically designed to cover the final rite expenses of senior citizens or elders who thrive on fixed income packages.
As long as the premium money is paid out regularly, the beneficiaries can get the funeral and burial expense amounts redeemed through this particular insurance policy. Therefore, this is a type of coverage policy that is easily accessible for those of you who are tied down to stricter budgets or money-constraining wallets.
As the coverage is specifically designed to take care of funeral and burial expenses, this type of policy cannot guarantee the beneficiaries long-term benefits or give away a lump sum that can cater to carrying on with the same legacy as the lifestyle of the demised one.
In a nutshell, this is a type of policy that only takes care of funeral or burial expenses offering beneficiaries smaller benefits or leaving behind a smaller legacy, and is typically tailormade for senior citizens that thrive on fixed income packages such as govt relief schemes or interim state govt aided packages.
Group Life Insurance
Group Life Insurance Packages are typically invested by employers who would want to roll out insurance packages for the welfare or safety of employees working inside their organizations.
One portion of the premium amount is levied by the employer or the organization that issues the policy to its employees. The other portion of the insurance policy is covered by deducting that amount of money from each employee’s payslip amount and the deductibles towards group insurance policy amounts keep happening over a month-on-month basis indeed.
These life insurance packages are given away to employees of an organization at discounted values that cost way less than regular insurance policies or schemes that you may have to sign up with regular insurance providers on the whole.
You can nominate yourself and include your immediate family members like your age-old parents or spouse as nominees for the program. In case of an immediate hospitalization of your family or loved ones, you can activate your group life insurance package to avail of a cashless hospitalization or too from leading health care providers or too.
However, you may not get your entire hospital bills covered and the group insurance policy offers a 60 -80% coverage on the overall hospital bills that your health care provider submits to the insurance service providers, and the amounts get dispensed between both parties.
You only have to shell out the remaining amount that is left uncovered in lieu of your hospitalization expenses.
In a nutshell, group life insurance programs are a boon to middle-class families that cannot afford expensive treatments at hospitals or privately owned healthcare centers.
Accidental Death and Dismemberment (AD&D) Insurance Policies
This is a life insurance package that provides coverage to the policyholder if he dies due to a fatal accident. Or, gets seriously injured in a life-changing accident.
This is a policy that provides lumpsum payouts only in case of accident-related injuries or accident-related deaths. You can add the AD&D plan to an existing life insurance plan or as an added coverage to any other type of stand-alone plan.
The prime advantage of taking up an Accidental death or dismemberment policy is the affordability of shelling out premiums quite easily. This is because the insurance service providers allocate payouts to policyholders only in case of accidents.
Plus, this is a policy coverage that is very useful for those of you who travel quite frequently on busy roads to schools, colleges, or places of work.
However, you do have a crux here. The AD & D policy only covers deaths or injuries that happen due to accidents and you cannot expect the death benefit if the policyholder dies from a natural calamity or illnesses.
In a nutshell, the AD&D policy is highly beneficial to middle-class people who are covered under high-risk daily activities with affordable premiums not burning a hole inside their wallets.
Convertible Term Life Insurance
This is a type of life insurance policy that allows policyholders to convert the term insurance into some kind of permanent or whole life insurance policy.
The best advantage is when you convert a term insurance into a whole life or universal insurance coverage with lifetime insurance benefits, you may not have to sit for a medical examination as the policy conversion happens only at the end of a term the policy is signed up for.
Although the post-conversion whole-life policies might attract pricier premiums, the efforts are all still worth it at the end of it.
This is mainly because they get lifetime coverage as and when they fulfill their obligations after receiving the payout from the term insurance policy.
This way, you can pay premiums that can fulfill your financial obligations on a long-term basis and continue paying premiums for lifetime insurance coverage packs.
This is an ideal option that suits middle-class families who cannot afford to pay pricier premiums at the beginning of the term but might afford premiums once the term ends and would like to encash their cash or insurance benefits over lifetime insurance coverage plans.
The Bottom Line
In a nutshell, it is term insurance policies that are affordable and accessible to most of the middle-class families out there. Plus, you get flexible insurance coverage and cash value benefits when family responsibilities and financial commitments are at their peak level.
When you have a look at whole insurance policies or lifetime insurance packages, then you only aim for insurance policy coverage but also want your investment portfolios to grow indispensably. Therefore, whole life and universal insurance policies are meant for those of you who want insurance cum investment options clubbed into one.
When it comes to accidental death or dismemberment coverage, you look for affordable plans that cater to risks involved with accidental deaths or accidental coverages.
Therefore, there is no one size that fits all, and each one of you may have customized or tailor-made benefits for which you may want insurance packages.
While choosing a viable form of insurance policy, you would ideally look for budget, premium affordability, number of years the policy covers, and above all the benefits the policy covers for you and your family members.
It is always advisable that you contact an insurance advisor who can sit with you one-on-one and discuss various plans with you. This way, you can seek customized and tailor-made insurance solutions that can perfectly align themselves with your current financial and family situation.
What are your thoughts on this? Do mention it in the comments below!
Frequently Asked Questions or FAQs
What are the best insurance or investment plans for middle-class families?
Answer: The best investment plans for middle-class families that include insurance coverage plans include the following:
a. Whole Life Insurance
b. Term life Insurance
c. Universal Life Insurance and
d. Funeral or Burial Expense Insurance
Can middle-class families in India afford mutual funds and insurance schemes clubbed into investment portfolios?
Answer: The best investment plans for middle class families involve invoking insurance plans with investment options. This way, the middle class citizens allow their investment portfolios grow at the same time while they can avail insurance coverage benefits for themselves and their loved ones. Therefore, investment-aided insurance policies serve the best in India for middle class individuals on the whole.
