What is the ideal way to buy a life insurance plan?

I am 30 years old and I am planning to buy a life insurance policy. Could you help me with finding the best way to select a policy?

-Name withheld on request

Great to know that you are thinking of taking a Life Insurance plan. It is a wise man’s choice and will help you safeguard your and your loved ones‘ financial future. Buying it the ideal way, I would say, is a very critical decision, and you should see all available plans in the market and then take the right call. Do not “Jump the gun,” and rather make an informed choice. You can also seek guidance from a financial adviser, who can present you with several plans as per your need. In such a case, the adviser will calculate your need and do risk profiling and also tell you the pros and cons of several plans while you select the best plan for yourself.

I am from Bangalore. I am a working mother and haven’t taken life insurance as of now, but I have other investments. Do you think life insurance is still needed?

-AshaPriya

I want to compliment you on doing a commendable job and taking care of your kid and responsibilities. You are doing an excellent job in planning for the future by investing and thinking beforehand about the needs of your family. This makes it more necessary for you to take a life insurance policy, which will safeguard your loved ones in unfavourable times. Along with financial protection, there are other benefits to taking a life insurance policy, such as: Critical Illness Cover- A Critical Illness cover can be included under the Term Plan by adding it through a rider.

Beside, you can leave a legacy for your loved ones- nothing can replace you, but solid financial backing will ensure that your family or dependents do not have to worry, at least on the financial part, in case of any unfortunate incident. Can give you tax-free returns- life insurance gives you tax-free returns with protection, no limits on investment, and flexibility to pay as per the plan chosen.

Queries answered by Sanjiv Bajaj, joint chairman and MD, Bajaj Capital. Queries and views at mintmoney@livemint.com