We often end up neglecting buying life insurance until the later stages of life. Yet, this is one mistake that we end up making. Yet, the right policy can be a much-needed financial safety net for your near and dear ones and will ensure their wellbeing in the future even when you are not around. However, before choosing to buy life insurance, you should know a little more about what it essentially stands for. Let us look at the same below in this article.
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Know Your Financial Objectives
Prior to understanding more about life insurance policies, you should understand more about your financial objectives down the line. Understand whether you desire a corpus for retirement or a secure fund to enable protection for your family once you are no longer around. Insurers usually have diverse kinds of policies, ranging from pure term policies to ULIPs and endowments among others. Select a plan that syncs closely with your financial requirements.
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What Is Your Desired Coverage Type?
Working out suitable coverage is vital when you buy life insurance. The right coverage should offer coverage for all your family’s requirements and commitments in the future, including marriage, education, and more. The rule of thumb is to purchase insurance with coverage value that is around 10-15 times of your salary. Do not neglect inflation, since it will have a role to play in your expenditure in the future.
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Duration of the Policy
How long should your policy last for? If your sole aim is protection until your children are grown up, then a term policy of 20-30 years might be enough. However, if you want to save money or retire early, then consider getting a longer policy with an investment component.
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Premium Costs
It’s appealing to have great coverage, but don’t exceed your budget. Affordable premiums are key to keeping up with your policy in the long run. However, also remember that cheap premiums do not equal good policy terms. So, make sure to balance your policy coverage and benefits with the premium amounts.
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Ratio of Claim Settlement
In India, insurance companies are regulated by the IRDAI, which publishes a claim settlement ratio for each insurer annually. This ratio represents how many of the insurance claims they received each year were settled successfully. A company with a high claim settlement ratio means its customers can feel secure their claims are being fulfilled when needed.
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Additional Rider Options
Riders are extra benefits you can add to your basic policy. Popular options include critical illness, accidental death, and disability coverage. Although they may push up your premiums slightly, they do provide that extra layer of protection. So think about your lifestyle and decide whether or not to add a rider.
Conclusion
The decision to buy life insurance is a responsible and necessary means of securing your family. By considering all these factors you’ll feel better prepared to buy a life insurance policy. Just remember, that life insurance will not only create financial security for you but also for those whom you love!
