You can buy a life insurance plan so that a sum of money is paid to your named beneficiaries when you die. The payment is made in return for the premiums that you pay during your lifetime. While applying, you must disclose your previous and current high-risk activities and health conditions to enforce the contract. Here is how to choose a suitable life insurance policy.
How to Choose the Right Life Insurance?
Assess Your Life Insurance Goals
The goal to buy life insurance differs from person to person. So, keep your own goal in mind. If you primarily want to protect your family's financial security in case of your untimely death, you can invest in a term insurance plan that comes with high coverage at affordable premiums. If you want to meet your emergency financial requirements post-retirement, you can buy whole life insurance. You can get the complete death benefit as the maturity value if you are gifted with a long life.
Choose the Right Coverage
Your life insurance cover is at least 10-15 times your annual income. Nevertheless, you need to consider certain factors to estimate the right coverage amount. In case you have debts, your family may face difficulty paying the EMIs in your absence. You may need to arrange money for your kid's higher studies or marriage. In the absence of the main breadwinner, your family may also face problems to maintain their current lifestyle due to the effect of inflation.
So, try to add the following costs:
- The annual expenses of your family multiplied by the number of years for which an alternative income might be required
- The total of your outstanding dues and the cost to repay any mortgages against which you have taken loans
- The amount required to be set aside for future costs, such as your child's wedding, education and more
From the added result, subtract the sum of your liquid assets, such as any sort of investment or any cash in the bank or hand. Thus, you can estimate an adequate life insurance cover.
Determine the Right Amount of Premium
Before you buy a life insurance plan online, use an online premium calculator to determine the amount of premium payable for the chosen cover amount. You can compare different policies to pick the one that offers the maximum coverage at a rate that is on your budget. You must also choose a suitable term for premium payments as per your income for the coming years.
Check the Reputation of the Insurance Company
It's important to choose a reputed insurance company to have peace of mind. For that, check significant factors like the number of:
- Claims paid
- Branches in India
- Policyholders
Know the Claim Settlement Ratio
This is the ratio of the number of claims settled to the number of claims filed by policyholders. Ensure that the chosen insurance provider has a high claim settlement ratio. Then your chances of claim settlement would also be high.
Keep the above tips in mind and check online reviews to buy the ideal life insurance policy.
