Factors To Consider Before Buying Life Insurance Policy

A Life Insurance Policy is a legal contract between the policyholder (you) and your insurance company wherein the policy insures to pay you an assured sum of money in exchange for a predefined amount of premium money on a regular or singular basis. The assured sum is paid in a lump sum on the maturity of the policy or to the nominee upon any mishap caused by unavoidable circumstances such as death or accident. 

Life Insurance is the need of the hour. It is the best you can do to secure the future of your family before investing in other plans. But How? The market is full of lucrative policies being offered by reputed organizations but that doesn’t mean that every policy suits your interest, let us give you a brief on the key factors to consider while buying a Life Insurance Plan for your family. 

Key Factors To Consider While Buying Life Insurance Policy

Following are the key factors you should consider while buying a Life Insurance Policy - 

1. Age Criteria Of Policy And Your Life Stage

Your current life stage and age are the first factors that should be considered while buying a Life Insurance Policy. As you grow older, you can plan the finances for your different life stages differently when you have enough funds in your hand. It can range from your health needs to funding your child’s higher studies to buying a house. Planning for the future beforehand will help you achieve all that you've aimed for. 

2. The Best Combination Of Premium And Coverage For You

You should keep clear and measured long-term goals and invest accordingly. While a policy with a low premium might look lucrative, it might not be a good option in the long term seeing its insurance coverage. Choose the best premium according to your budget which covers most of your needs. According to experts, your life cover should be 10 times your yearly income to cover the expenses in case of a mishap. 

3. Background Check Of Your Insurance Company And Agent

All insurance companies have comprehensive disclosures on their website which gives you extra information or let’s say the details your agent might keep a secret. You must check the company’s current financial positions, customer service capabilities, previous disputes and your agent’s customer base etc. to ensure the best for you. 

4. Understanding The Company’s Claim Settlement Ratio

The claim settlement ratio is the indication of the claims settled by the company compared to the number of claims it received. A company with a healthy ratio is investment-worthy and can be trusted. However, the market is very regulated and most of the companies have a ratio above 80%. 

5. Inclusions And Exclusions Of Your Policy

Last but not least, you should always check the additional and intricate features of your policy so that you don’t find yourself helpless in an emergency. Make sure your policy covers critical illness, accidental disability, child support benefit, cashless hospitalization etc. and is inclusive of all other things you could need according to your age and health conditions. Be informed and prepared for what is not covered in your plan. 

The Bottom Line

Investing in a Life Insurance Policy is a task of a lifetime and should be done wisely. A wrong investment can cost you a lot while a right one can secure the future of your loved ones. Now that you know the key factors to keep in mind, we’re sure you’ll choose the policy that safeguards your family's future in the best way. 

Also read - Should You Buy Life Insurance Or ULIPs?

Disclaimer: This article is issued in the general public interest and is meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive and should research further or consult an expert in this regard.