Life insurance is a popular product that people seek to invest in. As this product has been around for a number of years, the trust factor it carries is immense. This product is strictly meant to ensure your family gets the required financial security in case of your sudden demise. There are many kinds of life insurance products like term life insurance, endowment plans, retirement plans child plans etc. With a plethora of variety and providers to choose from, there are a few things you need to look into when you buy life insurance –
Understand the cover amount you need –
The most important thing to decide when you buy life insurance is the sum assured. This is the lump sum amount your family receives in case of an eventuality. Make sure you are not over insured or under insured. Ideally you should opt for 15 times the annual income if one is less than 40 years of age, 10 times the annual income if one is between 40 and 45, and 5 times the annual income if one is 45 or more. Also, you can use the formula - Another method that you can choose to decide the amount is Sum Insured = (total loans outstanding + amount required for children's education and wedding) + (average annual consumption related expenditure) *10. Do keep in mind the repayment of loans if any.
The pattern of premium payment –
In order to keep the insurance active, you need to pay a certain premium amount towards the policy regularly. This amount is decided on the basis of the sum assured you opt for, the tenure, your age etc. Some policies offer you the flexibility to choose if you can pay the amount annually or semi annually. On the other hand, some plans are rigid and ask for annual payment of premiums. You can choose which payment pattern suits you the most as per your cash flow.
The provider you need to choose –
When you set out to buy life insurance, you will encounter a huge range of providers, each vying to get your attention with attractive marketing strategies, benefits and features. Making this choice can get really confusing as every provider tends to offer a product with better features and benefits. In order to make the right choice, do research about the leading providers on the internet. Compare them for their policies, claim settlement rate, premium amount etc. Buy life insurance from a provider that matches your criteria completely.
Decide the kind of life insurance you want –
As mentioned before, life insurance policies are of different kinds. The variety includes pure term insurance, endowment plans, retirement plans, child plans etc. Each of these plans have a different purpose to fulfill. You need to make a choice according your needs. Buy life insurance that fulfills your top most priority. So, if you only need to secure your family in case of your sudden demise, opt for a term insurance plan.
Check at your end before buying a life insurance policy