Life insurance is an investment to secure the financial stability of your family, in the event of your untimely death. Most Indians prefer taking a life insurance policy because of the triple advantage it offers – savings in tax, investment, and life cover. Life Insurance is a long-term contract, and the insurer has to be very careful while submitting the application and signing the contract. The insurer should go through all the terms and conditions of the policy and understand its implications. He should also know the list of included and excluded deaths in the policy. The insurer must provide all the correct information at the time of signing up for the policy to avoid problems at a later stage.
Things to consider before buying life insurance
Every person’s needs are different. In the same way, the policies offered by different providers are different. Insurance is a personal investment, and you should not follow others blindly while opting for insurance cover. You have to choose the one that best suits you. Here are the top 5 considerations to make before buying a life insurance cover.
Choose an insurance policy depending on your needs and requirements
The life cover should be ten times of your annual income to provide a safe financial cushion for your family in case of your sudden death. Also consider lifestyle expenses, loans, and other payouts while determining the estimated cover. Since insurance is also a long-term investment to meet future goals, opt for specific policies which cater to them. For example, if your goal is to finance your children’s education, choose a policy that is suitable to take care of this goal. The policy should deliver the funds needed at the promised time, even when you are not living.
Always take a policy from a reputed and trusted insurance provider
There are many sites that help you to compare the policies offered by different insurance companies. You can also know comprehensive details of the policy on the company websites. Check the claims settlement ratio of the company. This helps you to know the rate at which the company settles genuine claims. Select an insurance provider with a high settlement ratio.
Go through the policy document thoroughly
The next important step after you select a policy and the preferred insurance provider is to go through the policy document thoroughly and understand its terms and conditions. Do not blindly trust the words of an insurance agent. The policy document has all the required information like the policy term, premium payment term, date of maturity, policy charges deducted from the premium, details of bonus etc.
Fill the application correctly and disclose all information
The next consideration is to fill up the application correctly. Provide all the necessary details and do not hide any habit or pre-existing health condition from the insurance provider. Care should be taken to fill in the personal details and nominee details correctly. This is essential for smooth processing of the claims.
Pay premiums regularly
The most important task is to keep your insurance policy working by paying the premiums at required intervals. Never miss the due date. Automate your premium payments by ECS; this will help you to maintain regularity in premium payment. Review your insurance cover regularly. If you feel the cover is insufficient, opt for additional covers to suit your requirements.
Conclusion: These are simple but effective considerations you must make while buying a life insurance cover. These simple steps ensure you choose the right kind of policy that provides adequate cover from a good insurance provider and helps you to maintain a working policy that will support your loved ones when you are not around.