Life insurance is a must in today’s scenario or any situation for that matter. After all, it is what secures your family financially in case of unforeseen mishaps down the road. Hence, neglecting to purchase at least basic term insuranceor other forms of life insurance is not at all a wise move. Yet, once you venture towards purchasing the same, you may find it confusing on several counts. Here is a brief guide to help you choose the right insurance policy as per your needs and budget.
Choosing Life Insurance Wisely- A Guide
When selecting term insurance or any other life insurance plan, you should keep these aspects in mind.
- What’s your core objective– Do you wish to secure your family financially in the event of your sudden demise? Then, a term insurance plan is best for you. Do you want to get life coverage with investment options for future goals? A ULIP works in this case. There are also child plans, whole life insurance plans, and more. Always finalize your core objective before moving ahead.
- What’s your necessary coverage– Coverage is something that should be planned carefully. Experts usually suggest life insurance coverage that is 10-15 times of your annual income at least. While calculating coverage, factor in future monthly household costs after accounting for inflation, higher education of children, weddings, repaying your liabilities and debts, and so on. You can then deduct your present liquid assets and investments from the final figure to arrive at the coverage amount that you require.
- What’s your budget– Compare premiums for your chosen insurance type and plan across multiple insurers. You will get an idea of what they usually charge for the coverage that you need and whether it fits into your budget or not. You should start as early as possible. Buying life insurance at a younger age means lower risks of fatalities and illnesses, thereby equating to a lower premium for relatively higher coverage.
- Choose the right policy tenure– The duration of the policy should be chosen smartly as well. It should ideally be the number of years for which your family will depend on you financially. Deduct your present age from the age at which you wish to achieve any goal or your income to stop coming.
- Always select a reputed life insurance company- Go with a reputed and trusted life insurance company that has a good claim settlement ratio (the number of claims settled against the total number of claims in a year).
- Check add-ons carefully– If your budget permits, check the available add-ons like critical illness, accidental death or disability, premium waiver, etc. These may offer sizable benefits for a nominal increase in your premium.
Signing Off
No matter what you do, read your final policy document carefully, watching out for all the terms and conditions, inclusions and exclusions, and hidden charges. Always do this extensively before signing on the dotted line. Finding the right policy requires a little homework on your part and following the above-mentioned pointers will help in this regard.
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