Five Important Tips to Consider When Buying a Life Insurance Policy
Having a life insurance cover is a necessity for all. It gives you the financial cushion in the event of any unfortunate incident. While life insurance is necessary, not many people know what to look for while buying a policy. This article gives you important tips on things that are a must know when you buy a life insurance policy.
When it comes to buying a life insurance policy for your family, you would surely want to buy the best policy to ensure maximum protection for your loved ones. However, considering the fact that there are myriad of policies and insurance providers in the market, choosing the right one can be an overwhelming task, especially if you are first time buyer. There are many things to consider, right from how much coverage you need to the benefits of different insurance policies. To help you make your insurance buying decision easy, you can consider the following tips:
Assess Your Needs
Before you start looking for the best life insurance policy for your family, it is paramount that you take a step and assess your needs first. Determine your financial contribution to the family - Is there any other source that your family can rely on to meet their expenses and pay the debts in the event of your untimely death? How many people are dependent on you? Knowing answers to these questions will help you know how much coverage you need and you would be in a better position to buy the right cover that will provide your family enough financial protection even after your death.
There are basically two types of life insurance policies – savings-cum-protection insurance and term policies. So, when you buy life insurance, make sure that you understand the difference between their features and the benefits offered.
A Term insurance policy is cheap; you can buy a large cover for a smaller premium. However, you must know that the insurance companies do not pay anything if the policy holders outlive their term life insurance policy duration. The term insurance only provides financial security against events that would be otherwise distressing to the policy holders’ family because of their untimely death. The savings-cum-protection life insurance policy, on the other hand, provides a maturity benefit, which includes the sum assured and the bonus.
Buy an Affordable Cover
After thoroughly assessing the different policies, you must determine how much can you afford to pay towards the insurance premium. If you need a large insurance cover, it would make sense to buy a term insurance policy. The premium for term insurance is much cheaper than savings-cum-protection insurance plans and you would be able to afford the premium. You can opt to buy a savings-cum-protection life insurance policy subsequently as your financial condition improves and you think you can afford to pay high premium.
Assess the Future of your Insurance Cover
When you buy life insurance policy, it is advisable that you take help of an insurance agent to understand the finer details of the policies like the exclusions – the events that the policy does not cover. Knowing this would be critical to make an informed decision and prevent your family from shock at the time of making the claim.
Know About the Claim Settlement History of the Insurer
You buy an insurance policy so that in the event of any casualty in the future, the insurance company will pay the promised benefits. It is therefore paramount that you do a background research about the claim settlement history of the insurer. You can easily get this information online on the insurance company’s website or you can check the Insurance Regulatory and Development Authority of India (IRDAI) website for the related information.
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