Choosing the best life insurance is a decision that you cannot afford to make in a rush. After all, it has direct implications on your family’s financial wellbeing in your absence. There will be times in life when you wonder if you made the right decision or if it could have been better. Don’t let your life insurance plan be one of them.
With so many insurance providers selling the best life insurance policies, the only way you can buy the best life insurance plan is by equipping yourself with the knowledge necessary to make an informed decision.
Here are a few questions that you should ask yourself to identify the right Insurance Plan.
- Do you need a old fashioned, no-frill insurance?
- Do you also want an accident cover?
- Does your family has a history of critical illnesses you want to be insured against?
- Do you want your family to have an income even after your death?
- Do you like to choose how you receive the pay-out?
- Do you really need to pay high premium when you are near your retirement age?
- How should you choose an insurer?
- How ease is buying an insurance?
- Does the the insurance you are looking for is competitive one in terms of pricing and offerings?
So, if you want to properly evaluate the actual cover and invest in the right life insurance policy, then you need to use the following principles for selecting the best life insurance.
Choose Maximum Insurance Coverage as Per Your Needs
According to the financial experts, the insurance cover for your life insurance plan to adequately cover the needs of your loved ones and adjust for inflation must be at least 15-20 times your existing annual income.
The sum assured is the amount that will be released to the policy beneficiary as a death benefit when the time comes. For it to do its job of helping your loved ones meet their financial needs in your absence, you need to choose the right coverage amount.
Life insurance cover amount of your policy should take all sources of your income, several dependents, your debts and liabilities, and lifestyle expenses into account. You must also decide on the best life insurance plan as per your own investment needs. For instance, a term plan will offer you a large cover as insurance coverage against life’s uncertainties, at a low premium.
However, if you want a combination of investment and insurance, then you need to look at Unit Linked Insurance Plans or other combination plans. Likewise, if you have other financial goals, such as paying for your child’s education or saving for your retirement, then work these goals into your coverage amount to come up with an ideal investment decision.
But most importantly, you must choose a sum assured that is sufficient to cover your needs. You should always check this aspect before making the investment decision.
Include Existing Liabilities and Future Financial Requirements in Your Calculation
Life insurance is not just providing financial safety to your family in your absence. It is also a way to balance your financial wellbeing with the selection of the right products.
But when you are choosing the insurance plans, it is essential to know all your debts and liabilities to be able to define the coverage and policy requirements. For instance, if you have an ongoing home loan, then a credit life insurance will help you cover the loan payments in case of your untimely demise. By taking this cover, you can completely free your dependents of all debts that they may be left to pay in your absence.
Similarly, future liabilities like a child’s marriage or education, too, will influence the decision to choose the best life insurance plan.
Check Riders
Insurance providers allow you to customize your life insurance policies to make it more suitable to your lifestyle. Therefore, you can check for rider options that can be added to your insurance plan to make it more comprehensive. There are various kinds of riders, such as critical illness cover that gives you protection against life-threatening diseases. If diagnosed with one, your policy provider will give you a lumpsum amount that you can use to pay for your treatment without relying on your family’s savings. Similarly, there are other rider benefits such as accidental death benefit and waiver of premium benefit, among others, that you can add to your policy to make it the best life insurance.
Purchase a Plan Only After Comparing
With so many insurance plans floating around the internet, it is only fair to do a proper review of each as per benefits and policy features before making an investment decision. Online plans provided by insurance providers, such as Max Life Insurance, enable you to compare policies online before selecting the best one. Since many insurance companies are offering a wide range of plans, the exercise will help you choose the most suitable insurance coverage as per your budget and lifestyle requirements. These days, you can also buy policies life insurance online that are not only cheaper but also easier to evaluate due to complete transparency in the online process.
Read the Policy Document
Never make an investment decision without thoroughly reading the policy document. You must understand the terms and conditions before making a lifelong commitment to a life insurance plan. Don’t forget to leverage the free-look period to ponder over your investment decision. If you feel that it not the best life insurance plan for you, then you would be able to cancel it for zero cancellation.
Be Sure Between Term and Whole Life Insurances
The first and foremost thing to consider is whether you need life cover for a specific length of time (term) or indefinite coverage (whole life).
Term Insurance is typically one of the cheapest short-term insurance options that pay the total sum assured to the dependents in case of death of the policyholder. If death of the policyholder happens after the term of the insurance cover, the coverage expires or becomes cost prohibitive. Some of the insurance policies come with a conversion feature wherein the policyholder can convert the policy from term to whole life by getting some re-certification done.
Whole Life Insurance usually demands higher monthly premiums than term insurance and it pays a death benefit to the dependents regardless of when the policyholder dies. Additionally, whole term insurance even offers several other benefits, including flexibility in payment of premium and tax-deferred investing.
With the help of these guidelines, you will be able to research and find the best life insurance plan that offers you maximum benefits for the lowest premium.
There are a lot of options to choose from when deciding on what kind of life insurance you need. Your age and personal situation will dictate what the most needed life insurance coverage is for you, as well as how much you can afford.
Consider term life insurance if…
- You need life insurance for a specific period of time.
- You need a large amount of life insurance, but have a limited budget.
- If you think your financial needs may change, you may also want to look into “convertible” term policies. These allow you to convert to permanent insurance without a medical examination in exchange for higher premiums.
Keep in mind that premiums are lowest when you are young and increase upon renewal as you age. Some term insurance policies can be renewed when the policy ends, but the premium will generally increase. Some policies require a medical examination at renewal to qualify for the lowest rates.
Consider permanent life insurance if…
- You need life insurance for as long as you live.
- You want to accumulate a savings element that will grow on a tax-deferred basis and could be a source of borrowed funds for a variety of purposes.
Keep in mind that premiums for permanent policies are generally higher than for term insurance. However, the premium in a permanent policy remains the same no matter how old you are, while term can go up substantially every time you renew it.
Life insurance is a long term contract between you and your insurer, and it will benefit your family when you are not there. It is in your best interest to choose the right plan for your family by considering all the important factors mentioned in this article.