Buying life insurance is not as easy as it used to be even a decade back. Over the past ten years or so, the life insurance sector has transformed drastically, with insurers getting more aligned to the modern-day needs of their customers and offering more products.
For the consumer, this means that there is a plethora of options. While that is undoubtedly an advantage, deciding the right kind of products and the amount of coverage you need has become a lot more confusing. So if you are facing a dilemma about the right cover, the following tips will come in handy.
You need life insurance to protect your family from facing any financial trouble after you are gone. Therefore, there is no undermining the importance of life insurance. To decide upon the right amount of cover is hence a very crucial factor.
You should give good thought to this by considering several factors such as the number of dependents you have, whether or not another family member is sharing financial responsibilities, whether you have young children whose education needs to be taken care of or if there is impending marriage in the family.
You must also consider your current income, your assumption of how much your salary will grow over the years, and your assets and liabilities. Finally, consider the lifestyle you lead and the financial requirements you foresee in the future.
Like everything else in life, you must consider the cost factor while buying life insurance cover. Check out the premium, the administration and fund management fees, the mortality charges, the riders, and how much you need to pay for them. Make sure you compare similar kinds of products before you decide on one that is best for you.
These days, several websites help you compare policies and choose one that is cost-effective for you. Before making your final choice, ensure that you have read the fine print carefully and know what you are getting into.
The primary purpose behind purchasing life insurance is that your loved ones do not face any financial hassle after you are gone. However, most people do not think about what would happen if the insurer makes it difficult for your family to obtain the money you have painstakingly put aside.
You must check out the claim settlement ratio, expressed in percentage terms. The higher the ratio, the more trustworthy the insurer is. Therefore do not get influenced by what an insurance agent may tell you or get attracted to lower premium products because they seem lighter on your pocket.
Life insurance policies should be purchased only to protect your family, so do not go overboard in buying several policies that are not in sync with your overall financial plan. If you want to save your taxes and meet the limits under section 80C, there are several other investment products you can consider to keep your taxes more efficient.
The thumb rule of investing and making a financial plan is periodically assessing your investments. In the same way, your insurance needs must be reassessed from time to time as well.
For instance, the policies you may have purchased when you were single may not be adequate when you are married and there has been an addition to the family. Therefore, reassess your insurance needs from time to time and ensure that your family is protected.
Life insurance should be an essential and memorable part of everybody’s life; therefore, choose the right amount of cover and be assured that your family will not be left in the lurch when you are no longer around to take care of them.
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