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How To Pick A Right Life Insurance Policy For Yourself?

Updated On Sep 06, 2021

Life is full of uncertainties, anything can happen unannounced. Life insurance policy can be a great way to ensure financial protection from uncertainties of life. Life insurance can provide an income source for your family in your absence. Life insurance policy provides a death benefit which is equal to the sum assured, in case of an unforeseen demise of the life assured during the policy tenure. However, while purchasing a life insurance policy most people get confused about the life cover amount, coverage people, policy tenure, insurance provider or about which plan to buy? 

There are certain factors that a potential buyer must consider before purchasing life insurance. Some major factors to keep in mind while purchasing a life insurance policy are claim settlement ratio of the insurance provider, your current lifestyle, expenditure, number of financial dependents, financial liabilities and your budget. 

How To Pick A Right Life Insurance Policy For Yourself?

Below mentioned are some tips that can help you pick the right life insurance policy for yourself:

Tip 1: Determine the Coverage Amount

It is advised that the coverage amount of the life insurance policy should be 10-15 times your annual income, but you should also consider the number of your financial dependents, their expenses and the lifestyle you and your family follow. It is important to choose a coverage amount which will help your family members to fulfill their daily financial obligations, maintain a healthy lifestyle, pay off the debts and pursue their dreams even when you are not around. 

Tip 2: Recognize the Type of Life Insurance 

There are different types of life insurance policies available in the market which are term insurance, ULIPs,endowment plans, money back plans, retirement plans and child life insurance plans. Term life insurance policies are widely known as pure protection plans. ULIPs let you invest part of your money in a market linked investment tool and part of your money for your insurance cover. Other types of life insurance policies are also savings cum insurance policies. One must realise his/her insurance coverage requirements and choose a plan that fulfills their requirements. 

Must read: Life Insurance Claim Process: All You Need To Know    

Tip 3: Claim Settlement Ratio

Claim settlement ratio is one of the important factors before purchasing a life insurance policy. You should always choose an insurance provider with a high claim settlement ratio. Claim settlement ratio refers to the number of claims approved and settled against the total number of claims received. An insurance provider with a high claim settlement ratio depicts the credibility of the insurance provider. If you choose an insurance provider with a high claim settlement ratio, you can fully rely on the insurance provider to settle your claim without any hassles. 

To Conclude

Above mentioned tips can help you choose a right life insurance policy for yourself. It is very important to choose a right life insurance policy for yourself because in difficult times a life insurance policy can help your family member maintain a healthy lifestyle and pursue their dreams even in your absence. 

Know more about: Overview Of Life Insurance Policy Types

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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