Buying a life insurance plan is very easy these days. However, you should take your time and then select the ideal cover, rather than buying the very first policy you come across. You should never hurry when you buy life insurance as then you may end up with a faulty cover that may be insufficient, redundant or too expensive. Take a look at this article to know more about the questions you need to ask before you buy a life insurance plan.
1. What Type of Insurance Plan Should I Buy?
Life insurance is available in various types. You need to understand what each type of plan offers and then choose the option that is best suited for you. Here are some common types of life insurance:
- Term insurance - This is a pure life cover that is also the most affordable form of life insurance.
- Endowment insurance - This is the most common type of life insurance. You get a combination of insurance and investment with this type of plan. You get a maturity benefit if you outlive the policy period.
- ULIP - Unit Linked Insurance Policy ULIP is another very good type of life insurance where a part of your premium is invested in the money markets and helps you to amass wealth, while your life stays covered.
- Retirement plan - This is another type of life insurance that helps you to build up a corpus for your retirement years, while you stay covered under a life insurance protection as well.
- Child plan - If you have small children, you can buy a child plan that would help secure your kid’s financial milestones in life.
2. What are My Requirements?
After deciding on the type of life insurance plan you would benefit from, you need to see what your requirements are so that you can get an ideal coverage amount. To understand what your requests are, you need to take the following factors into consideration:
- Dependents- You need to start off by seeing who your dependent family members are. If you have a larger number of dependents, you will need a larger life cover and vice-versa.
- Other sources of income - If your family has a rental income, if your spouse earns a salary or your parents get their pension, you will have a lower financial liability towards your family as compared to a situation where you are the only breadwinner. Keeping this in mind, choose your coverage volume accordingly.
- Debt - If you are repaying some loans, make sure your life cover is large enough to accommodate those as well.
- Financial milestones - And finally, you need to see what your future financial milestones are. For example, if you have young kids, you must make provisions for their higher studies and marriage in your life cover.
3. What is My Budget?
The next vital question to ask is about your financial capacities. It is natural for you to want the highest possible life cover to ensure your family has a smooth life after your death. But while this is universally desirable, you need to be practical and choose a life cover that you can afford. If the coverage is too high, the premium will also be too high and you may not be able to pay the premium at some point of time. So remember to analyse your financial health before you buy a life insurance plan.
4. Which are the Riders Available?
Riders are available with all life insurance plans. You must explore the riders available and then choose the ones that are of greatest use to you. Do not buy every rider that you come across as you may not need them all. Also, every additional rider you purchase will push up the cost of your life cover, so choose with care.
5. What Should be the Ideal Policy Period?
The perfect life insurance cover has many components. It offers the perfect sum assured at the perfect premium rate and it also keeps you covered for the most appropriate period of time. This is why you should buy the life insurance cover for the correct duration. Calculate all your requirements and familial situations and see for how long you need the life plan and then choose the ideal policy period to get the maximum value out of your life insurance policy.
6. Where Should I Buy the plan From?
These days, life insurance is easily and readily available online. All the leading life insurance companies in India are present online and sell their life plans digitally. It is simple, inexpensive and convenient to buy life insurance online. You can also buy the plan offline, through an insurance agent. Choose the purchasing channel that you are comfortable with and get the best life insurance policy issued in your name.
Once you have successfully answered all these questions, you will find it easier to locate and buy your ideal life insurance cover. As you know, choosing an appropriate life insurance policy is very crucial. So keep asking these questions and find your ideal coverage without any issues whatsoever.