Buying a life insurance policy in India is undoubtedly one of the most crucial decisions you must make to shield your family’s future in case of life’s uncertainties. A life insurance policy ensures the policyholder protects his/her family financially when he/she is no longer around.
As several types of life insurance policies are available in the market from different insurers, choosing the best one for yourself and your loved ones can be daunting.
Hence, here are some important tips on how to choose the best life insurance policy in India according to your requirements.
A life insurance policy is an agreement signed between a policyholder and an insurance company. The policy promises to pay a lump sum amount to the nominee in case the policyholder dies during the policy term.
In return, the insured person must pay premiums to the insurance company for a certain period against the insurance coverage.
Life insurance is a safety net for your loved ones in your absence. It enables your family to be financially independent and helps them maintain their lifestyle without compromising their essential requirements.
So, here are some reasons why life insurance is important:
Protects Your Family Financially
Life insurance acts as a protective net for you and your family in case of an unexpected event. The policy ensures your loved ones won't suffer financially and do not need to compromise their lifestyle in your absence.
Helps Accomplish Your Financial Goals
Along with protecting a life cover, life insurance helps you accomplish your financial goals by creating a financial corpus. Paying a monthly premium towards the insurance policy will help you collect funds.
Saves Tax
Under Section 80C of the Income Tax Act, 1961, you can claim a tax deduction against premiums paid towards your life insurance policy.
Gives Peace of Mind
Life insurance can help your family financially when you are no longer around, giving you peace of mind. You can also take a retirement plan that provides a life-long regular monthly income.
Now that you know about life insurance policies and their importance, let’s explore the different types of life insurance policies available in India.
Term Insurance Plan
Whole Life Insurance
Retirement Insurance Plan
Child Insurance Plan
Endowment Plan
Unit-Linked Insurance Plan (ULIP)
Money Back Plan
Here is a list of the top 10 tips that will help you choose the best life insurance policy as per your requirements.
Assess Your Financial Needs and Goals
Financial needs and goals may differ from person to person. Understanding your personal life insurance goals, like what you are looking for and who you want to protect financially.
For instance, if your main goal is to protect your family financially, you can choose to invest in a term insurance plan, while if you want regular income post-retirement, you can choose a retirement plan.
Calculate Your Insurance Cover
It is suggested to calculate your insurance coverage while considering some key factors, such as the daily expenses of your household, loans, if any, your children’s education or wedding and the growing inflation. Based on this information, you can choose the best insurance plan as per your needs.
Determine the Premium
It is important to determine the premium you need to pay for your desired life insurance policy. The premium amount generally depends on factors such as age, lifestyle behaviours, riders chosen, and the insurance policy that offers the highest coverage at affordable rates.
Choose the Right Policy Term
The policy term is ideally the duration for which an insurance plan remains active and during which you can utilise the benefits provided. As per the general rule of thumb, you can conclude you're right policy term by subtracting your current age from the age at which your income may stop, or you wish to complete your specific life goal.
Look for a Reputable Insurer
It is recommended that you find a reputable insurance company that has a claim settlement ratio (CSR) of over 95% for consecutive years. The CSR percentage shows the number of claims an insurance company has settled and the total number of claims received.
To view the updated CSR of different insurance companies in India, you can head to the Insurance Regulatory and Development Authority (IRDAI) website.
Reading customer reviews can also help you understand your desired life insurer's claim service.
Do not Hide Anything from Your Insurance Provider
You should not hide any important information from your insurance provider while buying an insurance plan, like your lifestyle habits such as smoking or consumption of alcohol, working in a hazardous industry or having any pre-existing illnesses.
These factors impact your risk profile. Hence, providing correct information is important to avoid claim rejection in the future.
Read the Policy Document Carefully
Before you go ahead, it is essential to read the policy document carefully and understand all the terms and conditions clearly. Check for the appropriate details, such as the lock-in period and the conditions under which the claim will not be in effect.
Consider Buying a Life Insurance Policy at Your Early Age
Investing in a life insurance policy early is wise as it allows you to pay lower premiums. Additionally, your money has adequate time to grow if you buy at a young age, helping you make more savings for a long time. You can start your policy with lower coverage and enhance it by adding more riders when your income rises.
Select a Comprehensive Plan
Medical emergencies may impact your income badly. Hence, it is essential to select a comprehensive plan with suitable riders, including critical illness, accidental death benefits, permanent disability and terminal illness.
Assess Your Life Insurance Requirements Constantly
Apart from all these things, it is also important to evaluate your life insurance needs periodically, as your financial goals might change with age and life events like weddings or childbirth. You can assess your life insurance requirements at intervals and regulate your coverage plan accordingly.
Choosing the best life insurance policy in India is a crucial decision that you should make by considering factors, such as your personal financial goals, the risk involved and your budget. Life insurance is a vital financial tool; thus, whether you buy life insurance online or offline, always choose the one that aligns with your financial goals and offers complete protection to your loved ones when you are not around.
By keeping the tips mentioned above in mind and doing in-depth research, you can decide to find the best life insurance online with complete coverage.
Disclaimer: This article is published in association with Teamology and not created by TNM Editorial.