I am 29 years old and my husband is 30 years old. We want to buy a life insurance policy. We are looking for a policy that not only covers the family after death (till the age of 60) but also covers us in case of disability. If we live beyond 60 years, we want the money for retirement needs. Can you help us decide on a suitable policy?

Dipti S

The objective of buying an insurance policy should always be covering the financial loss to the family in case of the bread-winning member’s demise. A plain-vanilla term insurance policy (that has no maturity benefit) will be inexpensive.

Even a policy of ₹ 50 lakh /1 crore sum assured will be affordable for most. You can add the ‘accident and accident disability rider’ to the term insurance cover. For a little extra premium, you will be compensated if you become disabled due to an accident or there is accidental death (where a higher pay-out is made than in the case of natural death).

But note, there will be a cap on how much cover you can take under the rider at ₹10 lakh or so. So, you can consider taking a separate accident insurance cover. Though premium may be a tad higher, it will offer a cover based on your income levels. These policies would cover permanent total/partial disability as well as temporary total disablement and accidental death. Royal Sundaram’s Personal Accident Insurance Policy that offers cover up to₹75 lakh is worth considering. It offers option to cover self and spouse under a single policy.

If you are looking for retirement benefit, you will have to consider savings/investment-cum- insurance combo plans. But remember, these will be expensive and will come with a ‘lock-in’ period.

Unit-linked insurance plans (ULIPs) give market-linked returns. You can take the risk of betting on market-linked investments if your investment horizon is 30 years. If you do not have the stomach for risk, and want some guaranteed return for retirement, you can choose from endowments plans in the market.

An endowment policy is the one wherein you, the policyholder, pay premium for a certain number of years and at the end of the policy term you get a lump-sum amount (on death during the policy term, the sum assured is paid). ICICI Prudential Assured Savings Insurance Plan (ASIP), HDFC Life’s Sanchay Plus and Max Life’s Smart Wealth Plan are plans that you can consider. The IRR in these plans is about 5.5-5.7 per cent.

There are ‘return of premium’ insurance plans too in the market that repay all the premium if you survive the policy period. However, note that these are very expensive (charge almost double the premium compared to regular plans) and not worth the money.