Choosing the right life insurance plan was never this difficult! Today, if you were to look for a policy, you would find an endless number of insurance plans offering lucrative features and benefits. So, how do you pick a suitable one without getting overwhelmed by the available options? Here are five insider tips to help you with just that and make the right insurance purchase!
- Understand your insurance needs
It is quite easy to pick a life insurance policy that you think covers your requirements and meets all your needs. However, insurance is meant to offer your loved ones financial support in the event something were to happen to you. Instead of leaving them to depend on the life savings, you provide a lump sum payout to secure their future goals. Hence, it is of utmost importance to sit down and understand how much coverage you need to pick.
The sum assured should not only include the daily expenses, cost of children’s education, etc. but also pending loans, healthcare cost and more. So, determine your assets and liabilities to choose the right insurance coverage that won’t fall short in the future. And to do this well, you must also consider the effect of inflation for the long term.
- Learn the costs involved
With various types of life insurance policies, the costs and expenses can vary. Be it a whole life insurance plan, a term policy or a Unit-Linked Insurance Plan, there could be some extra charges involved. To avoid any last-minute confusion regarding the premium quote or fees charged over and above it, ensure you ask beforehand. This could include rider fees, fund management charges, mortality charges, etc. Being prepared from the start shall assist with completing the buying process and you will be secured with insurance soon! Check out the life insurance calculator to compare plans and pick the best one.
- Avoid going overboard
It is normal to go overboard with a life insurance policy, be it in terms of riders or getting additional plans. The drawback of doing so can cost you a lot in the future without any real benefit. One example of this is purchasing too many add-on covers. Though riders come at a nominal rate, it is recommended to buy the ones that suit your needs. Going overboard with riders could lead to a high insurance premium. Similarly, getting one too many policies just for the purpose of tax savings can be detrimental. Therefore, avoid making unreasonable purchases in case of insurance.
- Research various insurance providers
Numerous factors can help you decide the best insurance provider to purchase a policy from. As the goal of having insurance is to secure your loved ones in your absence, you need to ensure a smooth claim settlement. If your beneficiary’s death claim is rejected, the purpose of getting a life cover goes in vain. Aspects like Claim Settlement Ratio (CSR), Incurred Claim Ratio (ICR), solvency ratio, etc. reveal a lot about an insurer. Also, the reviews and ratings of existing and past policyholders should be taken into account. Instead of opting for an insurance company for its well-known name, it is crucial to do your own research.
- Revisit your life insurance plan
As you grow older, the responsibilities in your life change along with your insurance requirements. You may have purchased a life plan in your early twenties for a cost-effective premium. But are the benefits of your life insurance plan still satisfying your needs? Since policy inception, several life changes like marriage, the addition of a new family member, home loans, etc. must have taken place. Therefore, it is recommended to assess your liabilities from time to time and revisit your policy. This activity shall ensure you have enough coverage to safeguard your family and yourself.
These five life insurance tips can go a long way in making sure you are always covered and have enough insurance. If you are still considering purchasing a plan, now is the time to do it! But ensure you read the policy documents thoroughly and understand the exclusions of the plan. If and when the time comes, you can rest assured that your loved ones are secure!
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