Finally made the decision to buy a term life insurance? With reputed companies offering term insurance policies it is difficult to choose one that suits you the most, it is after all a daunting process. When shopping for term life insurance there is a certain checklist we recommend. Making a wise choice in life insurance is practical as it keeps away risks and uncertain incidents that you might not foresee.
Buying life insurance requires not just a practical approach, but understating of what insurance policy suits you the best. A hurried buy or buying through reference/recommendation does not make a convincing purchase. If the right calculated choice is not made, your policy could be irrelevant to your requirement, which is the case with most buyers.
Moreover buying a life insurance plan from a trusted company is always sensible, as you are certain of its reputation in the market and your money invested is in safe hands. Here is a checklist applicable to every type of life insurance buyer.
Your Financial Status
It is essential for every buyer to first calculate their expenses vs their earnings. After all an insurance policy is an investment requiring you to invest in a regular premium amount. Knowing your expense against your earnings will help you understand how much you can invest on a regular period. It will also help you as an investor understand how much coverage you and your family require. Understanding your financial status, your assets, liabilities etc, will enable you as an insurance buyer understand your financial goals.
The purpose of buying a life insurance policy is to secure your family financially even after you are no longer alive. Therefore as an investor and someone looking out for their family’s interest, you need enough coverage that will not just provide for monthly expense, but also ensure that they have enough to lead a lifestyle they want.
Moreover there are certain objectives and milestones in your life, like birth of a child, education, higher education, marriage expense, etc. These are milestones where you might need lump sum money to pay off expenses that are unavoidable.
Insurance experts always advise that, when planning to save for your future always multiply your expense at least 10 times to that of your current income. This will give you anapproximate amount considering inflation is at a rise annually at the rate of 4%-5%. For e.g. if your current income is Rs 11lakh annually. Your cover requirement in this case is 11 crore a few years down the line. Once you’ve calculated on the basis of this rule you will understand what your future requirement will be.
Policy Term To Invest In
Understanding the term to invest your policy for can be a daunting process, especially if you have agents trying to up sell their insurance brand, regardless of your requirement. Lets take an example to understand this better. If you are 25, single and have no children, we suggest you invest in a term plans that will give you a lump sum amount for your marriage, on the birth of your child, education etc. You can plan your insurance term accordingly as to the milestones you plan to cross in your life.
You could also have family goals wherein you plan on buying assets like property, car, etc.
Life Insurance and Retirement
Buying life insurance to secure your retirement years is a good option. However these days, insurance companies offer specialised retirement plans that buyers can choose from. There is no harm in choosing a retirement plan as well as a life insurance policy, if your finances permit you. However if you can only afford a single policy, choose a life insurance plan as it serves as a saving tool as well as secures your life.
Online Or Through Agents
Initially insurance policies were only sold through agents. These agents only however up sold policies whose insurance companies they were associated with. The buyer was not given much choice and there was not much emphasis on what suited the buyer. With online policies buying an insurance policy today has become easier. Moreover the elimination of agents has made premium for these policies cheaper and much more affordable.
The buyer easily check and calculate premium with the help of premium calculator. Online policies are easier to buy and its terms and conditions are at the disposal of the buyer. Online policies also allow the buyer to pay their premiums online using your credit card. Paying your premium through a credit card could further invite a few other offers for e.g. Rs. 1000 cash back on premium payment of Rs. 20000.
Once you have adhere to this checklist, and you’ve arrived at a conclusion, you should have enough knowledge on what you can expect out of your life insurance policy. In turn this will only help you make the right decision. We advise you to refrain from buying policies from agents just because your family member or friend recommended it.