Tips To Buy A Life Insurance Plan The Right Way
Updated On Aug 10, 2022
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Buying a life insurance plan is one of the most crucial financial decisions you make. The first step is to ensure you have some basic understanding of life insurance. Different life insurance policies offer different benefits. The myriad of options might confuse you when deciding on the best life insurance plan. So, here are tips about buying a life insurance plan.
Important Tips to Keep in Mind before Buying a Life Insurance Plan
Given below are some important tips that will help you decide the best life insurance plan that will meet all your requirements.
- Life Insurance is Not an Investment: Do not mix investment with insurance; many individuals are not aware of one of the key financial lessons. Life insurance provides you with protection against unforeseen situations, whereas investment lets your capital grow and multiply. You cannot meet your investment goals if you use life insurance for investment purposes.
- Coverage: First, it is important to know how much coverage you need to fulfil your family requirements if something uncertain happens to you. The life cover you need depends on the number of dependents, your liabilities, your present and future income along with other factors such as your assets, etc. You must also consider inflation to finalise the life cover amount your family will require in the future.
- Frequency of Premium: After deciding the cover, the next step is to decide how often you can pay the premium. Most life insurance companies offer a range of payment methods for premiums – pay the entire premium in a lump sum or pay at regular intervals – monthly/quarterly/yearly. You must choose the most convenient payment method.
- Tenure of the Policy: Tenure plays an important role when you buy a life insurance policy. The longer the policy tenure, the more premium you have to pay. Also, you must look at the maximum possible tenure for your age to get the best possible cover.
- Life Insurance Riders: Insurance riders are coverage enhancements that a policy buyer can opt to take in addition to the basic life insurance plan, to increase the coverage scope. Add-ons or riders can be taken for critical illness, accidental death, income benefits, etc. With several insurance companies offering a wide range of riders or add-on covers, you have ample options to choose from. Therefore, you must choose riders wisely as you are charged an additional premium for these riders over and above the base plan premium.
- Compare Policy: Once you have evaluated all the above-mentioned points, it is time to decide from whom to buy the life insurance plan. You must compare different policies by different insurance companies and get as much information as possible about the features and benefits of different policies. Once you have done this, you can choose the best life cover.
Conclusion
When it comes to buying life insurance, you have a lot of choices to make. Everything from selecting the right coverage amount to choosing a reputable life insurance company can make the process challenging. The above tips will help you understand your life insurance requirement and assist you in making the right decision concerning the life insurance plan.
Also read: Can I get guaranteed returns on life insurance plans?
