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Tips To Find The Best Life Insurance Plan

Updated On Apr 30, 2021

The need for a life insurance policy cannot be stressed more, especially in the 21st century where our expenses are skyhigh and can be a strenuous financial obligation to pull off alone. When you are deciding to buy or invest in life insurance, you should take cognisance of the benefits, terms and conditions that come along with it. 

Factors to Keep in Mind While Purchasing a Life Insurance Policy

There are certain factors that you should keep in mind while choosing a life insurance policy that offers the best coverage. The following is a list of pointers will help you to choose the best life insurance plan in India - 

1. Different Kinds of Life Insurance Policies

One of the first things to bear in mind while investing or buying a life insurance policy is the different kinds of plans that are available in the market. Broadly, there are three different kinds of insurance policies namely a term insurance plan, a unit-linked investment plan or ULIP and a money back or endowment policy. Each of these plans have different benefits and services, as well as investment opportunities with a definite income option.  Therefore, you must take into consideration your financial and investment requirements before you hurriedly decide to purchase a life insurance policy. 

2. Insurance Cover

To buy the best life insurance policy, you must be aware of your specific insurance requirements. There are special life insurance policies  that help you to fulfil your financial obligations towards your family, children and yourself. For example, children’s plans provide you with financial assistance for sponsoring your child’s education, professional goals and aspirations, even in your absence and annuity or pension plans seek to offer you a regular income in your post-retirement years when a stable source of money is of utmost need. Hence, you must take your financial and coverage needs into consideration for selecting a life insurance plan that is best suited for you. 

3. Sum Assured Amount

While buying a life insurance policy, you should take a look at the sum assured amount and settle for a policy that has a high sum assured amount. Life insurances are designed to financially cover you and your family members in terms of monetary distress and in your absence as well. Therefore, you should select a policy which comes with a sum assured amount of at least 10 times your annual earnings. The policy should also have a lump sum payout option so that your nominees and dependants can receive sufficient coverage to fulfil their needs and obligations  in your absence. 

4. Claim Settlement Ratio

A claim settlement ratio refers to the percentage of the number of insurance claims that have been settled by any insurance company out of the total claims made. Choosing a  life insurance policy from an insurance company that comes with a high claims settlement ratio reflects the ability and success with which they have settled their insurance holder’s claims. This tip will help you to select the right policy and maximize your benefits from a successful company and effectively safeguard your financial needs in the face of any emergency. 

5. Premium Payment Term (PPT)

Being aware of the premium payment term in a life insurance policy is important. While this generally corresponds to the policy term, there are some insurance policies that come with a reduced PPT. Such a feature is helpful in instances where there is a possibility of your income being decreased and you might not be able to pay the premium for your insurance plan. Hence, choosing a plan with limited payment options is strongly advised. It ensures the continuity of your life cover against premium payments for a limited period of time. Some policies even have a decreasing premium rate and sometimes, the sum assured is reduced annually with the decrease in premium. You must take cognisance of this fact before settling for a policy that offers a low or decreasing rate of premium. 

These are the few tips that will help you to select the best life insurance policy in India. It should be borne in mind that the primary objective of a life insurance is to cover your risk and future financial needs effectively. You should be able to pay the premium and the sum assured must sufficiently cover the monetary needs of you and your family. If you follow these steps, hopefully you will be able to select a life insurance plan that is best suited for your requirements. 

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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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