Life insurance is a great way to help your loved ones avoid financial hardship if something happens to you. But how do you know which is the best life insurance policy for you?
There are numerous compelling reasons to consider purchasing a life insurance policy, such as a recent marriage, a new baby, or incurring a large debt that your family would struggle to repay if you died.
There are various types of policies from which to choose. Keep an eye out for and avoid these major blunders when looking for a policy. This article will discuss the factors to consider, things to avoid when purchasing the best life insurance policy, and a list of the best insurance policy in India from which to choose.
What exactly is a life insurance policy?
A life insurance policy’s objective is to provide financial protection in the event of an untimely death of the insured person. Insurance companies offer life insurance. You must pay a nominal sum known as the premium to obtain the insurance. It is a one-year cover, and the premium amount for the following year can be different in its raw form.
Factors to consider when searching for life insurance
To understand how to pick the best insurance policy in India, let's look at essential factors.
To help you understand how to choose term insurance, here are a few tips:
1. Examine your age and dependents
When looking for a term insurance policy, first assess your life situation. If you're single and the sole breadwinner of your family, you may want a longer-term policy that will provide coverage for years to come. Each person has different financial responsibilities, and it's essential to choose the right policy based on those.
2. Assessment of current lifestyle
Understanding your loved ones' lifestyle requirements will help you protect them better. Consider your current lifestyle when estimating the required life coverage from term insurance. As a result, even if you are absent, your family's standard of living will not suffer.
3. Identify Your Income
To get a more accurate picture, you should analyse your income. If your income is insufficient to cover the premium, your financial situation may become overburdened.
4. Analyse the existing liabilities
It can be financially disastrous for your dependents if the policy term does not cover the repayment period or if the amount falls short. Debts and liabilities are important considerations when choosing term insurance. Loans, if any, must be repaid over time.
5. Added riders to the plan
Insurers offer riders as additional instrument tools to enhance the coverage of an insurance policy. They can be added to a base policy at the time of purchase. Critical illness riders, accidental death and disability riders, and premium waiver riders are some of the standard riders available with term insurance plans.
6. Check the insurer's claim settlement ratio
The percentage of successfully paid claims by an insurer concerning the total number of claims received in a fiscal year is expressed as a ratio. It reveals an insurance provider's intention and capacity to keep their promise of providing financial assistance in times of need. The policyholder must consider the insurer's claim settlement ratio.
Avoiding Mistakes When Purchasing an Insurance Policy
When buying the best insurance policy in India for your family, many blunders can be made. Here are some of the most common mistakes people make when shopping for insurance and how to avoid them:
1. Inadequate term insurance coverage: When you buy a term life insurance policy, you should pick a cover that is at least 8 to 10 times your annual income. The basic principle is to be able to cover the costs of your dependents' needs. If you are unsure how to pick an adequate cover, you can use the Human Life Value calculator to get a more accurate value.
2. Shorter policy term: Insurance with shorter terms is cheaper and may entice you to make a poor decision. Prevent falling for lower prices that only offer coverage for 10 or 20 years. Instead, choose a policy that will keep you protected until retirement. You'll have to pay more for your premiums once you turn 45.
3. Putting off life insurance: It is easier and more practical to buy insurance early in life. The earlier you purchase your term plan, the lower your premium amount will be. In your 20s, you are less likely to suffer from prevalent lifestyle diseases, thus increasing your chances of obtaining life insurance.
4. Sharing false medical information: Insurance companies have the right to refuse a death claim if the death is traced back to an illness you had when buying the policy. Not disclosing a health condition may result in a lower premium at first but could affect them severely in a crisis.
5. Not purchasing an insurance policy online: Purchasing insurance online is simple and highly secure. It is also a more affordable option because customers can take advantage of numerous discounts from the comfort of their own homes.
6. Considering insurance as an investment: Insurance is not just an investment; it's a protection tool above anything else. Buying the best life insurance policy is to ensure your family's financial security in your absence. Some plans may have maturity benefits, but regardless of that, the primary purpose is to protect your family.
Here is the list of some best insurance companies in India :
● Max Life Insurance
● Canara HSBC Life Insurance
● India First Life Insurance
● Daiichi Life Insurance
● Shriram Life Insurance
● SBI Life Insurance
While looking for the best life insurance policy, keep above tips in mind. Your financial cushion can significantly support your family in trying times. It’s the best way to ensure you are with your loved ones every step. Avoid falling victim to common misconceptions while purchasing insurance coverage.