The recent COVID-19 pandemic highlighted the vulnerabilities of human life and amplified the need for purchasing a feature-packed life insurance policy with adequate coverage. But as the insurance needs of every individual can be different, one should focus on their custom requirements before deciding.
Here are 5 steps that can help you choose a life insurance policy that is right for you-
- Number of Dependents and Life Stage
The number of family members financially dependent on you changes throughout the life stages. For instance, the responsibilities are heightened when you get married and start a family. Closely analysing the number of dependents and the life stage you are at can help you determine the coverage amount for your policy.
While doing so, ensure that you also consider the future and plan accordingly. Most policies allow you to choose the coverage amount of your choice, with higher coverage resulting in higher premiums.
- Focus on Your Financial Goals
Plans like ULIPs and endowment insurance are a combination of life insurance and investment. These long-term products can significantly contribute towards financial objectives such as purchasing a home or managing the expenses of child’s education or marriage. You can also make them a critical component of your retirement plan.
Focus on your long-term financial goals and understand how the life insurance policy can contribute to those objectives.
- Policy Tenure
Insurance plans like term plans are purchased for a fixed duration, generally ranging between 10-30 years. The insurer will only pay the death benefit to the policy beneficiary in case of your unfortunate demise within the policy tenure if you have purchased a basic term plan.
It is generally recommended that one choose a policy tenure that is long enough to cover them until retirement. Your current age and expected retirement age can help you choose the policy duration. You can also go ahead and select a longer tenure that lasts way beyond your retirement for added protection.
- Check the Payout Options
Payout options are as important as the coverage amount as they can help you ascertain that your family receives the required financial assistance at times of need. For instance, if you are currently repaying a home loan, you can choose the lump sum pay out option to help your family repay the loan after your demise.
If you want your family to receive smaller amounts at regular intervals for managing the ongoing expenses, you can go with the instalment pay out option. Alternatively, you can also break down the death cover into a lump sum amount paid on death and instalments paid on a regular basis up to a specific period.
- Consider Riders to Maximize Coverage
Riders or add-ons help you extend the scope of your life insurance plan. They offer additional coverage over and above the basic death cover at a small cost. Accidental death benefit, accidental permanent or temporary disability benefit, and loss of income benefit are some of the most popular riders.
But not all the insurers in the country offer all these popular riders. So, before deciding, check the various riders provided by the insurer and select ones that you believe are ideal for you.
Choosing the Right Life Insurance Plan
To better meet the life insurance needs of the customers, most top insurers in the country now offer enhanced flexibility regarding the death cover, policy tenure, pay out options, and more. To make the right decision, it is essential to thoroughly understand your and your family’s needs and expectations.
You can also get in touch with a top insurer to discuss your requirements and let the insurance experts recommend the right plan for you.