How To Purchase A Suitable Life Insurance Policy?
Updated On Oct 18, 2021
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With so many policies in the insurance market, you might not be able to differentiate between various plans. It may also be difficult selecting a suitable life insurance plan or knowing some of the basic features that your insurance must-have. Let’s look at some key pointers that can help you buy the right plan.
How To Choose The Right Life Insurance?
Here are a few points that might help you to choose the right life insurance:
Choosing the Right Type of Policy
While there are many types of life insurance plans, they can be broadly classified under four categories. Each of these come with unique benefits.
- Whole Life Insurance: It comes with a guaranteed life insurance coverage for up to 100 years
- Term Life Insurance Policy: Offers death benefit for a specified period
- ULIPs: Offers the dual advantage of insurance coverage and investment
- Endowment Plans: Offers death or maturity benefit whichever is earlier
The Policy Period
While some plans such as the whole life insurance plan provide you coverage up to 100 years as long as you pay the annual premiums, others such as the endowment plans come with a specific maturity period ranging between 10-25 years or more. The duration of the policy will depend on factors such as:
- Your Age
- Your Retirement Age
- Number of Dependants in the Family
Living and Survival Benefits
While a term plan only offers a death benefit, many other plans also come with the additional living or survival benefits. Although the premium of term plans is usually the lowest, the maturity and survival benefits offer some great advantages to the insured. Some plans also give a bonus for the number of years survived by the insured.
Choose the Add-ons
Other than living and death benefits of a life insurance plan, there are additional benefits too which can be acquired by paying a little extra. These can come in the form of riders. Some of the popular riders are;
- Critical Illness Rider: In this, the insured usually gets a lump sum if s(he) acquires a critical disease.
- Premium Waiver Rider: The insurer pays the premiums remaining in case of death of the insured to provide full maturity and death benefit to the beneficiary of the insured.
- Accident Disability Rider: It guarantees a certain amount for your family if you ever end up being disabled due to an accident.
While choosing a rider, it is essential to look at the cost implications and other caveats. Choose only the ones that may seem necessary.
Check for Company’s Credibility
Once you have shortlisted a few favourable policies, it is time to dig into the company you are trusting with your future plans. Since you’re mostly going to invest for 10,30,50 years or more, it is essential to choose a company that has been established for a long time and has strong financials. Look for other factors such as claim-settlement ratio, premiums and benefits offered, etc.
Life insurance has been essential for almost all families for quite some time now. It is indeed better to have a backup plan in case things go astray. Just make sure that you keep in mind these things while looking into life insurance quotes.
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.