Buying Life Insurance ? Here are Few Tips

Buying Life Insurance ? Here are Few Tips

Most of us would have few questions on taking a decision to buy a Life Insurance Policy, like which is the best policy, what are the things to be considered while buying it, how to choose it. Let us look at few basic things we need to be informed about while buying a Life Insurance Policy

Buy it for a Purpose

The core purpose of Life Insurance Policy is when you have dependents and for them to sustain their current standard of living in your absence. Therefore when you have dependents you definitely need to buy Life Insurance. If you do not have you might as well opt for a good health insurance to take care of your medical expenses.

And when the primary purpose is to secure your family’s financial needs in your absence, you should be ideally looking for a pure Term Insurance.

The right buying time

Insurance Premiums grow high with the age of the insured. From the view point of an Insurance Company the risk associated with the insured is less at a younger age and therefore the premium will be lower. And most of the insurance companies stop providing life cover above certain age. So it is always advisable to consider buying Life Insurance at a younger age.

Ensure an adequate Cover (Sum Assured)

Post understanding right Insurance Plan for you, it is essential that you calculate the right Sum Assured (Benefit) of the policy. Make sure that you are not under insured by keeping low sum assured to save premium. Generally as a thumb rule, a multiple of 7 to 10 of your annual gross income with the value of any debts you have would be an ideal sum assured you should be looking at.

The Insurance Company also matters

Always get opinion from other buyers on the speed of response and the attitude of the Insurance Company from whom you are planning to buy the plan. Also have a look at the company’s claim settlement ratio to get a broader perspective on this.

Comprehend the exclusions and clauses

Most of the plans will have some exclusions or exceptions which will lead to declining of the claim. It is necessary that you understand the fine prints and the exclusions written on it to make yourself aware of the plan inside out.

Have a careful look at the Add Ons

You might find advices to include Add Ons (Riders) with the Insurance Plan from various sources. Though it is not a bad idea to have them, evaluate the add ons to make sure that they are really required for you, as it does not come free of cost and can increase the premium burden on you.

Validate the information you provide

In most cases of a declined claims, a major reason is the lack of true details provided while taking the policy. Providing incomplete or false information might lead to claim rejection. Therefore it is advisable to validate the information provided to the insurer before you sign the contract to avoid any such situations later.

Remember, Insurance is not Investment. Keep them separate.

You may be able to see various innovative products, with investment options combined with life insurance. But keeping in mind the primary objective of a life insurance, it is advisable to keep the investment and insurance options separate.