Buying life insurance can be a daunting task for a first-time buyer. However, the first step you need to take in that direction is to understand the meaning of life insurance, how to use an investment calculator, how to determine accurate coverage, etc. Different life insurance policies have different benefits.
8 Things to Look for While Buying Life Insurance
To meet these varied needs, insurers often provide a wide range of investment products that can be supplemented by add-ons. Also known as riders, they help make your policy more comprehensive and covers you for more uncertainties, such as accidents, critical illnesses, and disabilities, to name a few.
The next critical step in this process is to decide which life insurance product is best for you. Here are a few good-to-know things that you need to keep in mind.
Take Your Current Life Stage Into Consideration
People pass through multiple stages of life, such as their first job, being married, first child, their marriage/education, your retirement, etc. Each of these stages has a different financial requirement. Planning for these goals requires you to be clear and specific about what you want.
For example, are you looking for a comfortable retirement? Do you want to fund your child’s education abroad? These are just some of the many financial objectives you will have over the course of your life. You can use an investment calculator to know how to fulfil these financial goals with ease.
Calculate The Accurate Life Cover You Will Need
The life cover you need will depend on a number of factors, such as dependents, liabilities, your income, lifestyle, existing assets, etc. Ideally, your life cover should be at least ten times your current income to be able to pay for your future expenses.
To calculate the exact amount of life cover you need, you can use the online investment calculator. The investment calculator lets you enter your personal and financial details to help you calculate the premium. So, you can choose plans that you can affordably pay for based on your expenses and income.
Always Choose The Longest Term
Not many people know this but staying invested for a long time will allow you to grow your wealth exponentially by using the power of compounding. You can use an investment calculator to see which financial product makes the most sense for your financial needs and how long you must stay invested to reap the maximum returns on your investment.
Learn About Various Charges And Benefits
You must make an effort to understand the charges that are attached to your life insurance policy. For instance, ULIP investors have to invest for the lock-in period of five years to be able to discontinue the policy without paying an additional charge for it. What is ULIP? ULIP is a Unit Linked Insurance Plan that gives investors an opportunity to get the benefits of a life insurance cover and wealth creation option by investing in a mixed portfolio.
However, it has a strict lock-in period of five years. Surrendering the policy before three years will make your insurance cover cease immediately. However, after three years, you are allowed to pay the surrendering charge to discontinue the policy. Therefore, it is essential for you to know about such charges to make an informed choice.
Understand various claim aspects
Don’t forget to learn about the claim settlement ratio of an insurance company. A reliable insurer will have the ratio in percentages of 80-90s, meaning they settle at least 90% of their insurance claims. It is always better to choose the company that has the highest claim settlement ratio. This will give you the assurance that your investment is in safe hands.
There are two types of life insurance policies – term insurance and savings-cum-protection plan. Term insurance offers large coverage and low premium. It is best suitable for people who want to safeguard the financial interests of their family, in case they are no longer around to provide for them. However, no payment is made to the insured person if they outlive the policy term.
On the other hand, savings-cum-protection plan offers maturity benefit to the insured person, which is equal to the sum insured along with a bonus. The best way to choose between these options is to use an investment calculator to know how much you can invest and for how long. Your choice should depend on not just your future needs, but also the immediate ones!
Ask about the servicing options
The insurance provider should not only provide you with comprehensive coverage for your life and finances, but also robust customer service. Be sure to check if the company has a wide network of branches as well as the services offered on digital platforms.
Look for helpful tools, such as an online investment calculator. These details will help you reach out to their department when you need assistance with regards to your policy.
Check the claim settlement history of the insurance company
The insurance policy is supposed to meet the financial needs of your loved ones in case something happens to you. Imagine paying for insurance cover all your life, only for the benefits to be denied when the time comes!
To avoid this, you must always check the claim settlement ratio of an insurer before investing with them. The claim settlement ratio suggests the number of claims settled by an insurance provider with regards to the claims raised, and a higher claim settlement ratio means more claims paid.
So, if looking for life insurance options to invest in? Explore options online by visiting the websites of trustworthy insurance providers such as Max Life Insurance to check their products and use the investment calculator before investing!