6 Life Insurance Buying Tips First-time Buyers can Swear On!

Some incidents are very precious to us like marrying someone, owning a property, welcoming a new member to the family and so on. We struggle day and night to achieve these goals and most importantly try to protect our family.

But have you ever considered the means of protection you choose so far?

Does your list even include life insurance plans? Or you’re simply afraid of buying one as you are not well-versed with the concept of life insurance.

Whatever the reason is, we’re here to help you today with some key life insurance buying tips, which will help you overcome the newbie fear of buying insurance.

Life Insurance Plans-The Importance of Buying

But before digging into details, let’s understand what is life insurance? A life insurance is a contract between the insurer and the insured, where the insurance company agrees upon offering financial protection. The protection is in the form of a pre-agreed amount, which is called ‘Sum Assured or ‘Life Cover’, to secure the financial future of the family. The policy works for a particular tenure, where the insured has to pay a regular premium to avail of the policy benefits. Some of the benefits include death cover, maturity benefits, survival benefits, loyalty benefits etc.

Now that you have a firm idea about what life insurance plans are, let’s move towards the tips to consider while buying it:

Tip 1- Analyse Your Reason for Buying Insurance

It is the most important thing to consider about why do you need life insurance. Almost 90% of people want life insurance at some point in their life. But you should know your purpose of buying. Don’t buy just for the heck of buying. Life insurance plans are beneficial in providing financial protection to the family in case of the absence of the insured, aid into retirement days, help to fund child’s future and so on. Overall, if you have dependents to look after, you should consider these plans. However, even if you don’t have liabilities, you should consider life insurance policies, as the younger you are, the lesser will be the life insurance premiums.

Tip 2- How Much Coverage Do You Need

The second most important thing to consider is how much insurance coverage you actually require. Depending on your coverage, the premiums will be decided. So, it plays an important role here. A higher coverage always draws a higher premium. However, you shouldn’t settle for a lower coverage just because you are paying a lesser premium. Point is that the coverage may not be sufficient in the time of needs otherwise. A rule of thumb here is insurance coverage offered by life insurance plans should be 10-15 times your annual income. Moreover, while choosing the sum assured amount, also consider any ongoing financial burden such as a mortgage or school fees, loan EMI etc. This way you’ll get a rough estimate of how much coverage actually you need while buying life insurance plans.

Tip 3- Say Yes to the Right Policy

Once you are done with the coverage amount you need, the next step is to find the right life insurance policy. If we consider the overall life insurance segment, there are plans such as term life insurance plans, whole life insurance, retirement or pension plan, endowment life insurance plans, ULIP plans, money back plan etc. You can consider one as per your requirement. Once the type is finalized, the nest question is how to avail the right policy?

Fret not, you can compare various policies with online aggregators and get the best deal.

Tip 4- Look for the Insurer’s Authenticity

An indispensable factor is to check how reliable the insurance company is. No doubt, the Indian insurance sector has flooded with numerous insurance providers promoting their offerings in every genre. Having said that, it becomes quite difficult for the buyers to decide which one will be the best. Well, while looking for the insurer, you must consider their claim history, ICR and CSR record, solvency ratio etc. These will give you a fair idea about the insurer’s reputation in the market.

Tip 5- Consult a Professional

Yes, he or she can be the person who helps you factoring your financial considerations, insurance needs and most important the needs of your family. They are the knowledgeable and authorized persons of an insurance company who provide sufficient information about a particular plan. Just make sure, you have approached the right person who is not fooling you.

Tip 6- Choose Your Beneficiary Wisely

Life insurance beneficiary is the person who gets the policy fund in the event of the sudden demise of the policyholder. A beneficiary can be someone from close relations such as spouse, children, trust or charity. You should think through who your nominees are and in case if a minor is included, the same should be held in trust.

A Piece of Advice!

Life insurance plans are one of the important elements your insurance portfolio should include. They are plans that offer adequate financial protection in times of need. They are the keepers of your financial sanity and well-wishers of your family. The only thing to remember is that you only chose the right option.

We hope, with these aforementioned tips, next time whenever you are up for buying life insurance plans, you’ll make your decision without a second thought. Stay insured!