In most cases, the insurer will remit a specified sum of money to the dependents when the demise of the policyholder happens. Apart from being a financial safety net for the dependents, life insurance offers other benefits as well such as acting as a savings instrument, provide financial liberty in old age, and it also aids in reduction of tax liability. Thus, there are innumerable reasons for opting for life insurance policy. Here are the golden rules to follow while choosing the life insurance, best suited for you.
- Evaluate life insurance objectives: Reasons differ from person to person and a life insurance must be able to meet these goals through a suitable life insurance policy. For example, if safeguarding family’s financial security is the primary goal, then the solution lies in buying a term insurance offering a high coverage at low premiums.
- Do not undervalue life insurance coverage: the Life insurance coverage should atleast be 15 times of the annual income of the policy holder. This must be done keeping in mind the current financial obligations and expected big expenses to be incurred during the period.
- Determine the optimal premium and negotiate the best suited deal: One should make use of online premium calculators and talk to multiple learned people in the insurance business, before buying a policy. Most of the policies sold these days are by agents who themselves are not aware of the policy risks, and end up trapping clients in an insurance which is not suited for them client. They do this to make more commission as agents.
- Selection of correct policy term: The policy period should ideally be the number of years your family will be financially dependent on you. The universal thumb rule for inferring the perfect policy term is to deduct your current age from the age at which one expects to retire.
- Do a background check on the Insurance provider: The insurance sector is flooded with sketchy insurance providers. Before buying a policy, read about the company, its profile and other important details such as Claim settlement ratio, availability of offices, and check their status of IRDAI site.
- One should never conceal particulars from the life insurer company: Remember, companies are never keen to part with money, inspite of having made the agreement. They will always look for loopholes, such as facts hidden by you, when you claim for insurance. Thus, never hide any details from them.
- Study the final policy document carefully One cannot stress on this enough, but study the final policy document carefully and understand all the terms and conditions clearly, before fully committing to it.
- Buy the correct life insurance at an early age: This would help to keep the premium low. You can keep adding riders as your grow.
For any life insurance queries, you can always look forward to connecting with us. Our experts are here to provide you with the right solutions.