What is the highest amount of life insurance you can get?

Having a list of major life goals handy will give you a better idea of the amount your family would need to fulfil their goals. By factoring in these goals, you can make an informed decision to choose life insurance coverage amount.

If you want to get survival benefits with term insurance, you might also want to know – ‘How much term insurance do I need with the return of premium option?’

Since you will get a survival benefit this way, you can select the life insurance maximum amount based on your life goals. Also, you can get an idea of the premium payable using term plan calculator.

2. Age 

Wondering – ‘how much insurance do I need when I’m young?’ Most life insurance buyers do this while pondering over life insurance maximum amount. The truth is – your age at the time of buying life insurance is a significant parameter that determines sum assured selection.

At different life stages, financial needs change. You might not have many financial liabilities if you are in your 20s. But as your family grows, these liabilities are most likely to grow as well. For example, you might have planned to buy a new home or car in the recent future. A suitable life insurance coverage amount for your family would be the one with which they can maintain their lifestyle as it is.

Another angle to look at the age factor is its impact on the premium for life insurance maximum amount. At a young age, you are eligible to buy an adequate sum assured at low premiums. It is because of the lesser risk of health diseases or similar eventualities. You also get the facility to choose an extended policy period to spread the premium payable, making it affordable to your pocket.

By considering the age aspect carefully, you will better understand how much life insurance do you need.

Also Read: Term Insurance Age Limit

3. Current Financial Liabilities 

Ever wondering why bank officials ask for a nominee when you borrow a loan? They do this to contact the nominee for loan repayment in case something unexpected happens to you.

Now, think of all the assets that you have purchased through loans. Your family would end up bearing the burden of these debts if you won’t be around, which is the last thing you would want to happen.

Even the simplest term insurance can help your family deal with such financial stress. To calculate an adequate life insurance coverage amount, you need to chart out such liabilities. Make a list of all the loans you have borrowed – organised or through money lenders, if any. Then look for different term insurance plans that can provide sufficient coverage at an affordable premium.

All such considerations at the time of buying life insurance can make you live happily, knowing that your loved ones are covered with a backup, and they can fulfil their dreams without any financial barrier.

A better way to look at the right life cover selection is to balance the premium and coverage. The life insurance coverage amount should be enough to support your family financially after you, while its premium fits well into your regular expenses.

It is recommended to have life cover of at least ten times the annual income. While it is a good reference to pick, you should check what suits your profile the most.

5. Estimated Working Years 

Given the work you do; you might have made plans for your retirement. You want to enjoy life after retirement with your spouse, not worrying about the work-related mundane. A crucial aspect of retirement planning is to get done with major financial responsibilities during the working years. The life insurance coverage amount you choose should correspond to a premium that you can easily handle during these years of your life.

By having a fair idea of when you would like to retire, you will have a duration in mind within which you need to plan to pay for various obligations. Life insurance premium payment, which also becomes a responsibility, can be handled within your work life. You can select a limited pay option with your life insurance plan and finish paying the premiums early on while the policy continues till a later age. Similarly, you can plan to get a monthly income and life cover under different life insurance plans.

Life insurance cover selection is a crucial decision in life. It will have a direct impact on the life of your loved ones. However, it is not the only thing you need to understand while choosing life insurance. Given below are certain tips for selecting the right life insurance coverage:

1. Add riders to your policy 

You can further make the coverage more comprehensive by including riders. Various riders like Max Life Critical Illness & Disability Rider, Max Life Waiver of Premium Plus Rider (WOP), or Max Life Accidental Death and Dismemberment Rider are available to add benefits under specified situations. Make sure you check the rider terms before including them in your policy.

Max Life Critical Illness & Disability Rider (UIN: 104B033V01; Non-Linked Non-Participating Individual Pure Risk Premium Health Insurance Rider)

Max Life Waiver of Premium Plus Rider (UIN: 104B029V04; A Non-Linked Non-Participating Individual Pure Risk Premium Health Insurance Rider)

Max Life Accidental Death and Dismemberment Rider (UIN: 104B027V04; A Non-Linked Non-Participating Individual Pure Risk Premium Health Insurance Rider)

A. A specific life insurance coverage may not be suitable for all individuals. Hence, you need to look at various factors like your income, expenses, and liabilities, if any, at the time of selecting term insurance coverage.

Q. Is it advantageous to buy life insurance policies online? 

A. Online life insurance purchase comes with several perks for policy buyers. You can easily look for various policies and their benefits online, match them up with your needs, and then make the buying decision. It also helps save money because of lower premium.

Q. How much life insurance do you need for retirement planning? 

A. If you want to plan for your retirement with a life insurance, you need to choose the one with regular payouts in the later years of life. The coverage depends on the kind of lifestyle you want to live in those years without financial worries.

Q. Is it compulsory to add riders to a life insurance plan? 

A. It is up to you to decide if you want to add riders to your policy for extended benefits. You can check the rider benefits and include them if they fulfil a specific need.

Q. Who will receive the life insurance coverage amount after my death? 

A. The policy nominee or beneficiary you choose while buying the policy will receive the death benefits. 

Disclaimer:

*^Savings mentioned are indicative of the maximum premium difference when the same plan/variant is bought offline

Life insurance can be an essential part of financial and legacy planning. When shopping around for coverage, you may come across various products that fall into two main categories: term life and permanent life (also commonly referred to as whole life). Understanding the essential differences between these two main types of insurance can help you make coverage decisions according to your needs and goals.

Remember that insurance products for groups, policies that cover a group of people under a single contract (e.g., coverage offered through an employer), can differ from policies sold to individuals. The following information below focuses on products as typically sold to individuals.

What is term life Insurance?

A term life policy is purchased to last for a specified period, such as 1, 5, 10, or sometimes as much as 30 years. Coverage expires when that period ends–hence the name–and therefore, a payout only happens if the insured's death occurs during the specified period. If the insured person outlives the original policy period, coverage renewal may be an option, but the premiums may be higher.

How term life coverage works

A term life policy may be the most simple, straightforward option for life insurance for many people. A death benefit can replace the income you would have earned during a set period, such as until a minor aged dependent grows up. Or, it can pay off a large debt, such as a mortgage, so that a surviving spouse or other heirs won't have to worry about making the payments.

When exploring life insurance options, you may encounter the word "cash value." Term life policies do not build cash value. Your premiums go towards your payout, making costs for policyholders comparatively lower than for permanent life insurance. However, some insurers have created term life products with a "return of premium" feature, returning a portion of the premiums you pay if a claim is not filed before the end of the coverage term. These policies can be more expensive upfront than standard term life insurance.

There are different types of term life, including level term and decreasing term.

• Level term life insurance offers a death benefit that stays the same throughout the policy.
• Decreasing term life insurance reduces potential death benefits over the policy's term, usually in one-year increments.

For more details on the different types of term life insurance, click here.

What is permanent or whole life insurance?

Permanent life, often called whole life insurance or cash value life insurance, provides coverage for the insured person's lifetime as long as premium payments are in good standing. Unlike term life, these policies may build cash value, which a policyholder or their heirs can access under certain conditions. Premiums, as a result, can be higher than for term life policies. Whole life products include several subcategories, including real traditional life, universal life, variable life, and variable-universal life.

How does "cash value" work?

When you pay premiums for permanent life insurance, they go toward the cost of insuring you, your policy fees, and building cash value. In the case of traditional whole life, both the death benefit and the premium are typically designed to stay at the same (level) throughout the policy period. However, the costs to insure you can climb high as you age, especially when you live past age 80.

Charging a premium that increases each year would make life insurance unaffordable for many people in their advanced ages. Instead, the insurance company charges throughout the coverage period a higher premium than needed to pay out claims in the policy's early years. The company invests this money and, as necessary, uses it to supplement the level premium to help defer the cost of insuring older policyholders.

By law, when these "overpayments" reach a certain amount, they must become available to the policyholder as a cash value, accumulating in a savings account. Under certain conditions, the policyholder can withdraw or take out a loan against the accumulated cash value. It's important to remember that cash value is usually restricted as a living benefit, remaining with the insurance company when the insured dies. Any loans against the cash value may reduce the death benefit.

Term life or permanent life: which is right for me?

All permanent or whole life policies typically offer the advantage of coverage during your entire life but can charge higher premiums than term life products. Therefore, your death benefit can be smaller than with term life for the same amount of money. People choosing whole life are likely to prioritize certain features that fit with their individual financial goals, such as the ability to plan for consistent benefits and premiums and the potential for tax-deferred savings growth via the cash value component of their policy.

Click here for more details on whole life/permanent life insurance.