While doing financial planning, no one can fully anticipate the future financial obligations and goals. But to be prepared for whatever may come your way, the first step is to have a term life insurance policy in place that protects you and your family.
But choosing the right insurance policy is not that easy as it used to be a decade back, since insurance companies today provide a plethora of options catering to the modern day needs of their customers. So if you are facing a dilemma in selecting the right one, the following tips will come in handy.
Assess your requirement:
You have carefully asses your requirements, by considering several factors, like number of dependants, your financial responsibilities, children’s education or marriage expenses etc. Your current salary, assets, liabilities.
Check for Policy features & Benefits:
It is critical to explore all your options before selecting the one that is best for you. Hence, it is important to consider your requirements, compare different plans to identify the one that offers the most coverage for the amount of premium you pay. Check out the policy features, evaluate the plan’s benefits and limitations. There can be hidden factors like sub-limits, waiting period, etc. that we tend to miss.
Read Terms & Conditions carefully:
When you are looking for individual insurance products, the inclusions and exclusions impact a lot. The best life insurance product should cover your risks efficiently. Hence, it is vital to examine the terms and conditions carefully and determine if they are favourable and meet your requirements. This would ensure that you and your family do not have to face any trouble at the time of the claim.
Insurance Periodicity:
You must plan for a policy to cover you until you retire or until your dependents are ensured of sufficient savings. It is advisable to choose a plan that comes with a minimal waiting period.
Affordability:
While it is important to purchase an insurance plan that fulfils your demands, it’s also pertinent that it fits your budget. While buying a policy, the premium should be affordable and the returns should satisfy the family needs in the best possible way. Considering your expenses, you can select a suitable coverage sum without having the investment burn through your savings.
You have to compare similar kind of products before choosing the one that is best and cost effective for you. It is good to start with a low-cost insurance policy to ensure that you are completely covered at an affordable premium. Over time, you can review your plan and adjust your coverage as your income, family size and needs change.
Automatic renewable options:
There are certain policies which demands timely renewal of the plan. Therefore, you can prefer those insurance products that provide automatic renewal for a lifetime.
Claim settlement ratio (CSR):
The main objective of purchasing an insurance policy is to provide financial security against unfortunate events. However, the purpose will not get solved if the insurance company does not honour your claims. CSR acts as an indicator of their credibility. As a general rule, the higher the ratio, the more reliable the insurance company is.
If an insurer receives 1000 claims within, out of which it settles 993 claims by paying the sum assured (that is, term insurance benefit), while reject the rest of the 7 claims, the CSR of the company would be 99.3% (993/1000).
Hence while buying a plan, always make sure to select an insurer that has a good track of settling the large number of claims received on yearly basis.
Do not go overboard:
While choosing the insurance policy, family protection should be your top priority. So do not purchase policies that do not sync with your overall financial plan.
Revisit your insurance needs:
Reassess your insurance needs from time to time and ensure that your family is protected. For instance, the policies you may have purchased when you were single may not be adequate when you are married and there has been an addition to the family. Hence reassessing the policy plans should be done periodically.
Following the above tips can immensely assist you in choosing the best plan for you. But it is important that before opting for any type of insurance policy, assess your financial goals and responsibilities to enable you to choose the right plan. However, having an insurance coverage is a must to provide sufficient financial security for you and your family.
