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A Complete Guide To Choose A Life Insurance Policy

Updated On Dec 20, 2021

A life insurance policy is a contract between you and a company that sells life insurance. You agree to pay a premium on a monthly or yearly basis. In exchange, the insurance company agrees to pay a predetermined amount to the person or people you name when you die.

Life insurance is a fantastic way to support and protect your loved ones, but it may be costly. A cheaper premium can save a lot of money over the course of a few years. Premiums for life insurance are determined by a variety of factors, and it can be difficult for some people to understand why and what the charges are, and why they pay a different rate than another. Many insurance companies look at a variety of factors when deciding the cost of their policies; however, some of these factors may be out of your control. However, the decisions you make throughout life may have an impact on the factors that determine your Life Insurance rate.

When Purchasing Life Insurance, Keep These Points in Mind

Following are the Factors to consider while buying life Insurance:

  • Don't Make A Purchase Without Researching

Many insurers make obtaining quotations via the internet simple. Because rates can vary, you should seek quotations from a few different firms before deciding which one to apply to for coverage. You might also engage with an independent insurance agent that represents a number of different insurance companies and can assist you in obtaining the greatest coverage at the best price.

Many tools (Need Calculators) and literature (both online and offline) are available to help you understand the nuances of these factors.

A thorough investigation that results in a well-considered conclusion is a job well done, so take note.

  • Claim Settlement Ratio 

The claim settlement ratio measures how many and how much claims a life insurance company settled in a given fiscal year. The total number of claims resolved is divided by the total number of claims received over a certain time period to arrive at a claim settlement figure. A higher and consistent good-claim settlement ratio implies that, in the event of a claim, the insurance company follows prompt and thorough procedures to ensure that all legitimate claims are resolved quickly. This is critical when purchasing a life insurance policy since the claim that the nominee will get if the insured event occurs is the primary benefit of the policy.

  • Never Let Your Insurance To Lapse

If you have a life insurance policy, you should avoid using words like "lapse," "discontinuance," and "surrender." This occurs when you fail to pay your premiums or decide to cancel your coverage before the end of the policy period.

It is a "luxury" to have life insurance, not a "right." It is a luxury to be able to obtain a policy from an insurer due of one's good health (insurable health), net worth (insurable interest), and trustworthiness (utmost good faith). You forfeit the "permission" simply by quitting or lapsed it.

You are depriving your family of their basic right to life by allowing them to lapse. You may not be in good enough health to take out a new insurance after your previous one has expired, or your policy may be denied due to health concerns. All of these circumstances are avoidable, and they will eventually deprive your family of these things.

  • Avoid Providing False Information

On your life insurance application, be careful not to leave any information blank or obscured. Insurance firms can use third-party sources to check the information you submit, according to Winslow, if you allow them access to your data.

By obtaining your medical records, prescription drug history, motor vehicle report, and public records, for example, the insurance company can learn more about you. A medical exam, which may include blood and urine testing, may also be requested of you.

  • Nomination

Ascertain if the insurance has a nominee who will receive the proceeds if the policyholder is unable to. You must also notify the nominee and any members of your family about your insurance coverage. Your nominee should be aware of your financial strategy at all times so that they can take the necessary precautions in the event that something goes wrong.


To summarise, determine your needs, purchase insurance after conducting extensive research, and pay premiums on time to ensure that all benefits are received. 

Also read: 

Does It Make Sense For Senior Citizens To Purchase Term Insurance Policy?

Exploring Different Types Of Life Insurance Policies In India

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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