Buying a life insurance plan is not an option these days – it is a necessity. However, even while it is important to buy a plan, it is even more important to buy the right life insurance plan. You therefore must be very cautious and choose the right kind of life insurance plan. There are a few factors that you must consider while buying life insurance. What are they? Take a look at this article to get the answer.
Factors to consider when getting life insurance
These are the important factors that will help you find the most suitable life insurance plan for yourself:
- Your insurance requirements: This is the first and by far the most important factor to consider when you buy life insurance. You have to take some time out and assess your life insurance requirements properly. This will help you to determine the cover you need. You have to first see how many dependent family members you have. Then, you have to calculate your annual income and the other sources of income for the family (rent from a property, parents’ pension, spouse’s salary, etc.). You then have to evaluate the household expenses as well as the financial milestones lying ahead. Once that is done, you will know what the value of your life insurance policy should be. The sum assured you choose should be large enough to help your family maintain its current lifestyle even after your income stops after your demise.
- Duration of the plan: The next factor to consider is the duration of the plan. You have to ideally buy life insurance till the time you earn. So if you are 30 years old and plan to retire when you are 60, the term of your life plan should be 30 years. If however you have financial milestones that would stretch beyond your retirement (child’s marriage, etc.), your life insurance plan should be long enough to cover those events. Choosing the correct policy period will make the life insurance plan work in your favour.
- Type of life insurance: Life insurance is not a single product. It has many different forms. The secret to finding the best cover is choosing the most appropriate form of life insurance. The common types of life insurance include the endowment plans, the money back plans, term plans, ULIPs and whole life insurance plans. You have to understand how each form of life insurance works and then see which suits you the best. The different life insurance plans offer different benefits so you have to identify the plan that is the most beneficial as well as economical option for you.
- Insurance provider: The performance of the life insurance plan will greatly depend on the insurance provider. This is why you have to select the insurance provider very carefully. Take a look at the claim settlement ratio to get a general idea of the insurer’s calibre. Besides, you also have to see what kind of customer assistance they provide. If you are happy with the insurance provider, go ahead and buy a good life insurance plan from them.
- Cost of the plan: This is another crucial factor to consider when buying life insurance. The various life insurance plans are priced differently. You have to pay the regular premiums to keep your life plan active. It is therefore important for you to have a plan that is affordable. If the premium is too high and you can't afford to pay it, your plan will lapse and you will lose your life cover.
The bottom line
It is very easy to buy a life insurance plan these days. However, exercising just a little bit of caution can go a long way to ensure you get the best deal out of the plan. Keep the points mentioned above and evaluate the factors carefully. You will surely end up with the best possible life cover at the best possible rate.s
Ekta Kariya is a freelance writer based in India. Apart from writing, Ekta spends most of her time socialising, reading and watching TV shows.