Life insurance is unquestionably one of the key pillars of personal finance for every household. A life insurance policy can be likened to a financial safety net that protects your family from unforeseen perils. However, if you are buying life insurance for the first time, there may be many doubts clouding your judgment. The insurance market is cluttered with numerous choices, hence choosing the right one may seem like an overwhelming task. Whether you choose to buy a term life insurance or a whole life policy, these useful tips will help you make the right decision:-
Determine the amount of coverage
Taking up a life insurance will not serve its purpose unless the coverage provided is adequate. Hence it is very important to determine the amount right amount of coverage required before taking up a life insurance plan. Most of the reputed life insurance companies provide online life insurance calculator on their website. These calculators help you determine the right amount of coverage and premium payable. All you have to do is input certain details regarding your income and expenditures and the online calculator will determine the right amount of coverage.
Compare policies online
Not every life insurance plan out there is right for you. Hence it is very important to compare and analyze at least 3 to 4 life insurance policies before making the final decision.
Buy as early as possible
As you age, buying a life insurance policy will become more expensive. If you buy a life insurance policy at a younger age, you can get a high coverage for a lesser premium.
Buy life insurance online
When you buy term plan online, you can avoid additional expenses such as agent’s fee and commute expenses. Moreover, online life insurance plans are cheaper due to reduced operational costs, commission charges, and other overheads. Hence it always better to buy life insurance online.
Check the claim settlement ratio
Claim settlement ratio is the ratio of the number of claims granted, over the number of claims rejected. It is important to buy life insurance from a company with a high claim settlement ratio. Most of the life insurance companies state their claim settlement ratio on their website. Buy insurance from a company with a claim settlement ratio of above 90%.
Read the document carefully
Buying a life insurance policy is a major financial decision. Therefore ensure that you read and fully understand the policy documents. If you don’t understand any of the terms or conditions mentioned in the policy, you can always ask for clarifications from the insurance service team. Unless you fully understand the document and agree to terms and conditions, do not sign the dotted line.