How to Choose a Life Insurance Policy to Meet Your Needs?
Updated On Jun 25, 2021
Table of Contents
Purchasing a life insurance policy from the plethora of available options by different insurers that meet your present monetary needs and will be able to ensure your family’s financial protection in the face of an unforeseen event can seem a daunting task at first. However, it turns out to be a fulfilling decision in the end. Hence, it is essential to choose the right policy to get meaningful results. Read on to know some metrics to help choose a life insurance policy to meet your needs.
How to Choose a Life Insurance Policy to Meet Your Needs?
Here are some factors that should be considered while choosing the right insurance policy according to your requirements.
1. Compare Different Policies
Various insurers offer multiple kinds of life insurance policies such as whole life insurance, term life insurance, ULIPs and money-back plans. Hence, it is pivotal to select the one that fulfils your financial requirements and future goals. For example - unlike standard life insurance policies, a term insurance policy does not offer maturity benefits. So, you can look for other options if getting a maturity benefit is essential to fulfil your personal and professional goals.
2. Calculate the Coverage
The number of financially dependent family members and their future goals and aspirations is crucial in deciding the coverage amount of the life insurance policy. Moreover, you can consult an insurance agent or a financial advisor who can help estimate your insurance requirements and calculate the appropriate amount to protect your loved ones after you.
3. Current Age
Your current age will help determine your needs and expectations from a life insurance policy. Various life insurance policies have different age ranges for their eligibility criteria. However, it is seen that the lesser the age of the life assured, the lower is the payable premium amount on the policy.
4. Current Income
The current annual income is another factor that helps decide the right policy as it determines the premium paying capacity of the life assured. Moreover, the life insurance policy should be more than 15-20 times the annual income. The premium can be revised after specific intervals according to the increasing yearly income as well.
5. Current Lifestyle
It is seen that the premium on life insurance policies provided to non-smokers is lower than those given to smokers as they have a higher chance of contracting diseases and illness. Hence, a healthy lifestyle helps lower the risk evaluation result done by the insurance provider and consequently leads to a lesser premium.
6. Post Retirement Plan
A life insurance policy helps in revenue generation even after the retirement of the life assured. You can choose to be offered a lump sum or a regular monthly income in the form of a pension after your retirement. Thus, you should select your life insurance policy according to your post-retirement plans and requirements.
7. Debt and Loans
Besides providing financial protection to the life assured’s family if he/she dies, a life insurance policy also helps in debt and loan repayments. You can purchase a whole life insurance policy or endowment plan if you do not want the burden of your debt to fall on your loved ones in case of an unfortunate event, as they provide the option of getting a loan against their policies.
Conclusion
After careful consideration of the factors mentioned above, you can purchase the right policy to protect your needs and your family’s lifestyle and future goals in the occurrence of an unfortunate event. Moreover, it is advisable to do a detailed study of the terms and conditions of the life insurance policy to get maximum benefits.
You may also like to read:-
