How to Choose A Right Life Insurance Policy?

With a myriad of policies offered by insurance providers, the decision to select the right life insurance policy becomes cumbersome and time-consuming. However, purchasing an insurance policy is an essential financial decision that should not be taken lightly. Hence, it is crucial to understand the basic features of life insurance plans and choose one according to your requirements.

Read on to learn some tips on choosing the right life insurance plan that will provide financial security to your loved ones in the face of an unfortunate event. 

How to Choose the Right Insurance Policy?

Some of the factors to consider before purchasing a life insurance policy are given below.

1. Compare Different Policies: Since there are multiple kinds of life insurance policies such as whole life, term life, ULIPs, and money-back plans, it is pivotal to select the one that fulfills your financial requirements and future goals. 

• Whole Life Insurance Policy: Costlier than other plans, the whole life insurance policy provides a cash value and death benefits. A lump sum is provided after a specific duration or in the event of the policyholder’s death, whichever happens first.
• Term Life Insurance Policy - The beneficiary is paid a death benefit if the policyholder dies before the term ends. Unlike whole life insurance, this plan does not provide a maturity benefit.
• Unit-Linked Insurance Policy (ULIP) - The life assured gets an additional option to invest in capital markets along with the life insurance.
• Money-Back Plans - The plan provides periodic benefits instead of paying maturity benefits at the term-end. 

2. Estimate Your Insurance Coverage Need: Certain factors like family needs, liabilities, and future financial goals should be regarded while ascertaining the right coverage amount. You can consult an entrusted insurance agent or a credible financial advisor who can help determine your insurance needs and estimate the appropriate amount to protect financially dependent people after your demise. 

3. Decide the Term Duration of the Policy: Determining the duration of the life insurance policy is as significant as the coverage estimation. Therefore, you can evaluate the tenure based on your future career goals, such as your plan to retire early or at a later phase of life, to get the retirement benefits accordingly. Moreover, you can estimate the time when your beneficiary and dependents will no longer require financial support to decide the policy duration.

4. Do Not Buy a Policy on Mere Recommendations: It would be best to choose a reasonable policy with an affordable premium rate to meet your distinct financial requirements and family’s future goals. It is advisable not to select a plan based merely on recommendations by friends and acquaintances. 

5. Evaluate Additional Benefits: Additional benefits help make a more substantial financial safety net for your loved ones in the face of an unfortunate event. Here are some add-ons you can consider while buying a life insurance policy.

• Critical Illness Benefit - Under this, the life assured is provided with a lump sum if he/she is diagnosed with a critical illness covered in their policy plan.  
• Accidental Disability Benefit - Under this, the life assured is paid a certain amount of sum assured monthly for a specific duration if he/she becomes permanently or partially disabled due to an accident.
• Waiver of Premium - Under this, the future premium payments are waived off if the life assured becomes seriously ill or disabled.
• Accidental Death Benefit - Under this, the beneficiary is provided with an additional sum assured if the life assured dies in an accident. 

6. Read Policy Exclusions: Policy exclusions include events like death during a war, childbirth, or suicide that are not covered under insurance policies. Unfortunately, people often forget to consider these while buying a life insurance policy. Hence, it is advisable to always look into the guidelines' nuanced details before purchasing a policy. 

7. Prefer Buying a Policy Online over Offline: Purchasing a life policy online is more economical than the offline method. You can compare various policies based on premium rate, duration, and additional benefits. In addition to this, the elimination of the middlemen's role and extensive paperwork makes the process less time-consuming and cumbersome.

Take Away

The act of purchasing the right life insurance policy is a very personal and significant financial decision. So, you should make sure that you consider all the aspects of a life insurance policy to purchase the most suitable option for you. 

Also Read:

Tips for Purchasing A Term Insurance Plan Online

Tips To Reduce Term Insurance Policy Premium

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