Buying life insurance is a must one. It is a special task which is completely for you and your family’s benefit. Some basic knowledge in this field is important and it should be in top priority before we go for buying any life insurance plan. Life insurance companies have several plans with them and depending upon your needs, you need to opt for the plan. The riders and the add-ons are available. The riders are those which will cover you during critical illness and add-ons are the simple life insurance plans. The most difficult part is to choose the insurance plan among several available ones because there are hundreds of companies and hundreds of plans too. We have prepared a quick guide of things you need to consider while buying life insurance.
12 Things to Consider While Buying Life Insurance!
Some of the points which we need to consider while buying Life Insurance is as below:
#1: The budget range
The first thing to consider before buying life insurance is the budget. The range shall be decided well in advance and also the tenure for which you are going to buy the plan. Decide a premium; especially on a monthly basis so that you can easily pay them out without any burden. This will help you in segregating between expenses and savings. Make plans and then execute them.
#2: Easy and swift payout
The best plan for you would be the one that has an easy and swift payout. The easy payout means there are many plans which have the normal waiting period of one or two years before you could get the 100% return after the death. Therefore, it is very important to buy a plan which can give you easy payout without any waiting period from day one if possible.
#3: Look out for all charges and the underlying benefits
There are several life insurance plans which help in saving taxes. Make clear of all such benefits so that you can use it at the right time. Also, many hidden charges are applicable and hence read all documents clearly before buying the plan. Mainly the administrative charges apply which can be too high depending upon the age at which you are buying a life insurance plan.
#4: The longest plan yields more money
The next thing to consider while buying a life insurance policy is that longer is the plan; higher will be the amount that one can get in the end. The amount that is used for investment in 5 years will give less value whereas the amount that is used for investment in 20 years will give more value as the compound interest is higher in the latter case.
#5: Calculate the members who need to be covered
The number of members who shall be covered in the plan is probably the most important thing to be considered while buying any policy. It may be your spouse and your children or even the group insurance policy that you are looking for. To be specific, the life insurance shall be 10 times more than anyone’s annual income.
#6: Decide how much life cover you are looking for
It totally depends on your choice as to how much insurance or the life cover you are looking for. The premium that you are ready to pay or say affordable to pay will decide how much life cover you can make. This decision can be made when you make clear segregation between your expenses and the savings. Some life cover calculators can help you decide this factor.
#7: Take the insurance plan early without much analysis
Another thing to consider while buying a life insurance policy is that a thorough analysis of the insurance that you are about to buy is important but that need not linger. The more time you take to decide any policy, the more premium you will have to pay, hence it is better to start the policy at an early age.
#8: Don’t forget to mention your beneficiary name
One we take the life insurance plan, there is always an option to choose the beneficiary. It is your task to decide who will be your beneficiary. Ideally, your spouse shall be your beneficiary or your children. It is advisable not to keep the old aged people as the beneficiary.
If you have changed the preference of your plan, try to change the beneficiary name as well.
#9: Don’t buy more than two policies
While buying the term insurance plans, don’t take more than two policies. The term plan shall only be one and maximum if you want to have then it shall be two. Dividing your money into several insurance plans is never a good option.
#10: Talk to an advisor
One of the most important things to consider while buying life insurance is that, if you are not aware of the best plans for life insurance then talking to an insurance advisor will be a smart move. The advisors are there to help you out in knowing every minute details of the plans as well as the pros and cons of the policies. They will also help you save time in deciding the policy. The affordable premiums can be found by the advisors only with a very good return of the investment at the end.
#11: Opt for term insurance plans as they are the most affordable
The term insurance plans are quite affordable. Among all the plans that are available in life insurance, the term plans are the cheapest ones with the least premiums and in budget too. This can be one of the most important factors while buying a life insurance plan.
#12: Consider the Claim Settlement Ratio properly
Most of the customers are attracted by the claim settlement ratio. It usually indicates the efficiency at which the policies are settled by the insurance companies. So, broadly if we consider that a company has a claim settlement of more than 95 percent then the company has been very efficient in settling claims.
Above were some of the points which you need to consider while buying any life insurance plans. It is a very good idea to have a clear picture of all the requirements before buying a term plan. The insurance company matters a lot while deciding on any plan. The better is the insurance policy selected the better return it is going to give in the end.
We hope the article was informational. If you have any doubts or suggestions, please reach us through the comments section below.