7 Key Tips for Buying Life Insurance Plans Smartly
5 min read | 5 months ago
Things to Remember While Purchasing Life Insurance Plans
Have you ever thought about the fate of your loved ones after you die and are not here to provide for them? It's a disturbing thought, but it is something you need to consider. One way you can make sure that your loved ones are taken care of even after death is by opting for a life insurance investment. However, buying life insurance can be confusing, and there are many things to consider before making a decision. In this blog, we will discuss the things that you need to remember while buying life insurance plans.
Why Do You Need Life Insurance?
First up, let's start with the basics. What is life insurance, and why do you need it? Life insurance is a contract between you and an insurance company, where the premiums you pay go to provide a lump sum of money for your beneficiaries upon death. This money may be used to cover such things as debts that remain unpaid at the time of one's decease or to support your family's living expenses.
You need individual, family or child life insurance in order to see that your loved ones are secure financially should something happen to you. If you are the breadwinner in your family, this could leave them in a very tough spot financially. Life insurance can be an invaluable safety net for such events.
Things to Remember While Buying Life Insurance Plans
Now, let's discuss the things that you need to remember while buying life insurance plans.
1. Determine Your Financial Goal
Before buying life insurance, you need to determine your financial goal. Ask yourself, how much money do you want your beneficiaries to receive when you die? This amount should be enough to cover your outstanding debts, funeral expenses, and living expenses for your loved ones.
2. Determine Which Type of Insurance Plan Do You Need
Life insurance is mainly of two kinds: term life insurance and permanent insurance. Permanent insurance provides coverage for life. Term life insurance covers you for a specific period this usually10 to up to 30 years. Term life insurance is generally less expensive than permanent insurance. But it doesn’t accumulate cash value for policyholders. If you want insurance for your children, child life insurance plans should be chosen instead of any other as they are specially designed according to children’s needs, such as education.
3. Determine the Coverage You Need
Once you have decided which type of insurance plan you need, you need to determine the coverage you need. This will depend on your financial goal and the type of insurance plan you choose. You can use online calculators to determine the coverage you need.
4. Choose a Long Term Insurance Plan
When it comes to life insurance, it's always better to choose a long-term insurance plan. This will ensure that your loved ones are covered for a longer period, and you don't have to worry about renewing your policy every few years.
5. Understand all Charges and Benefits of Life Insurance Coverage
Before buying life insurance, make sure you understand all the charges and benefits of the coverage. This includes the premium amount, death benefit, cash value, and any other charges associated with the policy. Plus, insurance premiums come with tax benefits under 80C and 80D, so make sure to do your research before buying the policy.
6.Check the Claim Settlement Process of the Insurer
You should also check the claim settlement process of the insurer before buying life insurance. Make sure that the insurer has a good reputation for settling claims quickly and efficiently.
7. Premium Repayment Mode – Regular or Limited Pay
Finally, you need to decide on the premium repayment mode. You can either choose a regular pay option, where you pay premiums throughout the term of the policy, or a limited pay option, where you pay premiums for a specific period, after which you are covered for the rest of your life.
Conclusion
There are several advantages of using a personal loan to cover immediate financial needs and repay the amount conveniently throughout your preferred duration. However, you should keep the above-mentioned tips in mind and check loan agreements minutely before signing on the dotted line.
FAQs
1. What factors should I consider before buying a life insurance plan?
You should consider your financial goals, coverage needs, budget, and the reputation of the insurer before buying a life insurance plan.
2. What are the different types of life insurance plans available in the market?
The different types of life insurance plans include term plans, whole life plans, endowment plans, and Unit-Linked Insurance Plans (ULIPs).
3. What is the ideal coverage amount I should opt for in a life insurance plan?
The ideal coverage amount should be at least 10-12 times your annual income, factoring in your debts, liabilities, and future financial goals.
About Unity Small Finance Bank
Unity Small Finance Bank is committed to making banking simpler and more accessible for everyone. Our services include Savings Account, NRI account, Current Account, Fixed Deposits, and Personal Loans offering flexible tenures and attractive interest rates. We also offer financing options like MSME Loans and Microfinance to support businesses and underserved communities. Learn more about Unity Small Finance Bank here.
