Buying life insurance isn’t what it used to be. Five years ago, it was mostly seen as a safety net. Now, in 2025, it’s become a lot more layered. Policies come with flexible benefits, investment options, and even ways to plan income for later years. And with more people thinking long-term about retirement, health care, and education, insurance is turning into something of a financial planning tool. But with all that choice, there’s also more confusion.
If you plan to buy a life insurance policy, especially for the first time, you’re not just picking a product but making a financial commitment. And it’s one that should support your life goals, not complicate them. So, the question really is: What should you look for before deciding? In this post, we’ll highlight the main factors you should consider while making this decision.
Understanding the Purpose Behind Buying Insurance
There’s a reason this comes first. Most people skip straight to price and miss the bigger picture. But insurance isn’t just about how much it costs; it’s about what you need it to do.
For some, the goal is protection, knowing that if something happens, their family won’t struggle. For others, it’s about saving for retirement or building a fund for their child’s future. Some even see it as a way to get structured returns while staying disciplined with their money. The kind of plan you choose should match that intent.
A working couple in their thirties might go for a term plan with critical illness cover, while someone in their forties may lean toward an ULIP or an endowment policy that pays out at retirement. That’s why clarifying why you’re buying insurance is half the decision already made.
How Much Life Cover Do You Actually Need?
There’s no universal answer to this. A 28-year-old with no dependents doesn’t need the same coverage as someone with a home loan, school fees, and ageing parents to support. What you’re trying to calculate is: If something were to happen tomorrow, how much would your family need to continue without major disruptions?
It helps to start by looking at your income, expenses, and outstanding liabilities. But don’t stop there. Add a buffer for things like inflation and large life events like education, weddings, and healthcare.
Coverage isn’t just about the number. It’s about how that number behaves over time. If you’re earning ₹15 lakh a year today, a cover of ₹1 crore may sound right, but how long will it stretch for your family? That’s the question worth asking.
Evaluating Claim Settlement Ratios and Insurer Track Record
When you buy a life insurance India plan, one of the most important things to consider is the claim settlement ratio. It is a parameter of customer satisfaction. That’s why it’s important to assess this factor.
Premium insurance companies like Axis Max Life Insurance Company have made a name for themselves as a dependable brand name. They boast a whopping 99.65% claim settlement ratio. Selecting such an insurer is your part of responsibility; it’s not about bagging a good deal, it’s about choosing a plan that delivers when your family is in need.
Tax Benefits Continue to Add Value in 2025
Insurance adds one more useful element to the mix if you’re already investing in instruments under Section 80C, like PPF or ELSS. You can claim deductions up to ₹1.5 lakh a year (only under the old tax regime) on the premiums you pay. This helps bring down your taxable income.
In most cases, the payout you or your nominee receives, whether as a death benefit or maturity benefit, is also tax-free under Section 10(10D). It’s one of the few financial products that offer both upfront deductions and tax-free returns. That said, don’t buy insurance only for the tax benefit. Use it to build a financial base that’s reliable, long-term, and flexible enough to support your goals.
Riders and Add-Ons: Are They Worth It?
People often ignore riders until they need them. By then, it’s too late. Riders are optional benefits that enhance your base policy. Some of the common ones include critical illness cover, disability benefit, and waiver of premium. They cost extra but can be useful when your financial situation is tight or you’re planning for dependents. If you’re comparing plans, don’t just look at the base cover. Look at what else you can build around it.
Premiums, Payouts, and Payment Modes: What You Should Know
People often zero in on monthly premiums when comparing policies. But that number, on its own, doesn’t tell you enough. What matters more is how the premium fits into your budget over time and what you get in return.
Policies now allow you to pay in different modes: monthly, quarterly, and annually. Some even let you pay for a limited term (say, 10 years) and keep the cover for longer. That can work well if you want to finish payments early and enjoy the benefits later.
Conclusion
Choosing a life insurance policy in 2025 isn’t just about filling a form and picking a number. It’s about balancing your today with your tomorrow. You want to protect the people who rely on you, while also preparing for a life that’s changing faster than ever.
The good part is that there are plans for every need, every budget, and every life stage. The tricky part? You have to understand what those plans actually offer. Don’t rush it, ask questions, and read the brochure. Think about what matters more: higher cover, tax savings, or long-term benefits. Chances are, the right answer is a mix of all three.
And when you’re ready, consider premium insurers like Axis Max Life Insurance, which offer flexible, goal-oriented solutions that evolve with your life, not just your income.
Standard T&C apply
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.
Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on several secondary sources on the internet and is subject to change. Please consult an expert before making any related decisions.
Tax benefit is subject to change as per the prevailing tax laws.
