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How To Compare Life Insurance Plans Yourself?

Published On Nov 17, 2021

The life insurance market is flooded with different life insurance plans, which, at times, makes it difficult for individuals to compare them and make a sound financial decision. Before beginning on how to compare life insurance plans, it is important for one to know what a life insurance plan is. 

What is a Life Insurance Plan?

A life insurance plan is an insurance cover which provides a sum of money to the nominee in case of an unfortunate death of the life assured. Now, broadly speaking, there are six types of life insurance plans namely Term Plans, Unit Linked Insurance Plans (ULIPs), Child Plans, Retirement Plans, Traditional Savings Plans, and Guaranteed Income Plans. While term plans are pure protection plans, all other life insurance plans have a savings or wealth creation component attached to them in addition to the life cover benefit.

How to Compare Life Insurance Plans?

One can compare life insurance plans by keeping in mind the following steps and key factors- 

1. Assess Your Requirements

The first and the foremost step in the process of comparing life insurance plans is assessment of your financial requirement. An individual must know whether they require a term plan or a ULIP or some other type of life insurance plan to compare different plans in the chosen category.

2. Check the Plan Benefits

After knowing the life insurance category, one must compare the life insurance plans in the selected category based on the benefits provided by them. Two of the primary benefits provided by most of the life insurance plans are death benefit and maturity benefit.

In addition to these benefits, various life insurance plans provide other benefits as well. For instance, the Future Generali Money Back Super Plan provides guaranteed additions to the sum assured. You must choose the plan which provides the maximum benefits in terms of the paid premium.

3. Compare Policy Terms and Premium Payment Terms

While ‘Policy Term’ reflects the validity period of the life insurance policy, the ‘Premium Payment Term’ refers to the time period during which the life assured is required to pay the premium. It is always wise to go with longer Policy Terms and shorter Premium Payment Terms.

4. Compare Plan Flexibility

Different Life insurance plans come with different flexibility benefits. For example, the Future Generali New Assured Wealth Plan allows one to choose from two plan options as per their savings goals, whereas, the Future Generali Dhan Vridhi Plan permits partial withdrawals after 5 years from policy inception. One must select the life insurance plan which best suits their flexibility requirements.

5. Check if the Plan has Paid-up Facility

There are various life insurance plans which in case of non-payment of premiums, convert the original plan into a paid-up policy, instead of nullifying it, if sufficient premiums have been paid. This helps the life assured get the plan benefits on a pro rata basis as opposed to losing them altogether. Future Generali Big Income Multiplier is one such plan which offers this benefit.

6. Compare Sum Assured

Sum Assured refers to the minimum amount which is paid to the nominee in case of an untimely demise of the life assured. The higher the sum assured, the greater is the financial security of the family in the absence of the life assured. 

7. Check if the Premium is Worth the Coverage

Individuals often mistake the plan with the lowest premium as the best plan. This is not true because a plan with lower premium is probable to offer lower coverage too. Thus, one must weigh the premium against the benefits offered by the plan to make the right decision.

8. Claim Settlement Ratio

Another important factor which you must check while comparing life insurance plans is the claim settlement ratio (CSR) of the insurance provider. CSR refers to the number of claims settled by an insurance company out of the total claims received by it in a financial year. The higher the CSR, the better it is.

You may also like to read - What Questions Should I Ask About Life Insurance?

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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