In today’s world, purchasing life insurance has become a must. You and your loved ones may be subject to financial stress as a result of life’s numerous uncertainties. It aids in the protection of your financial interests as well as the achievement of crucial goals you may have along the route.
However, you should familiarize yourself with the following five considerations while purchasing life insurance:
- Disclose all correct and latest information: When it comes time to purchase the coverage and fill out the application form, double-check that all of the information you provide is accurate and factual. Any misrepresentation or deliberate non-disclosure might lead to the application being blacklisted or possibly being refused. Before the policy is officially purchased, you may be required to undertake a medical examination, and any attempts to conceal the results may result in the application being immediately refused. Whether you have a pre-existing medical condition, whether you smoke, or your actual income…tell the truth, even if it means paying a higher premium.
- Buy two smaller policies of two different types: Many consumers make the error of purchasing a single large policy with a high premium and a sum assured that is proportional to the premiums paid. Instead, you can purchase one money back or endowment life insurance plan and one term life insurance plan; the former may have a little higher cost, whereas term plans often have lower rates. The benefit of doing so is that you get the best of both worlds: the money back/endowment plan rewards you when you reach retirement age, while the term plan protects your loved ones while you are gone.
- The policy term: The policy’s tenure, or duration, is also significant to examine. If you’re buying an endowment plan, the maturity date must correspond to a goal you want to achieve in the future. The policy term should ideally be equal to your Retirement Age minus your Current Age. This basic rule of thumb can help you choose the policy term before you buy it.
- The insurance cover you need: Begin by determining which of your future demands, as well as those of your family, the life insurance policy can meet. Make a list of all your long-term objectives, such as your children’s schooling and weddings, spousal assistance in your absence, future medical bills, and a retirement fund. Put a number next to each one to represent the amount of money required to achieve that goal. Add the numbers together, multiply by ten, and account for future inflation (at 6 percent , to be conservative). You can also utilize the different internet calculators available to estimate future education costs, marriage costs, and other expenses for your children. The total is the quantity of insurance coverage you’ll require. At least ten times your current salary should be guaranteed. Calculate the figures using an insurance calculator.
- Buy insurance online rather than through a broker: In India, all of the major insurance companies provide customers with the option of purchasing life insurance online. Because processing expenses are lower online than offline, buying the coverage online might yield in lower premiums – occasionally by up to 30%. In addition, because a broker is involved in the purchasing process, the insurance company is not required to pay a broker’s commission. The customer benefits from the cost savings.