Long gone are the days when life insurance was deemed the rich man’s indulgence. The world keeps getting busier, more hazardous by the day—a fact well reflected by the boon in the life insurance sector, with more and more people looking to purchase a policy.
But with so much competition in the market, so many different plans, deciding upon the best life insurance policy can be quite perplexing. Here’s a step by step guide to help you with your quest…
Figure Out Your Requirements
The primary objective of a best life insurance policy is that it safeguards the financial future of your dependents or loved ones. In that sense, virtually everybody in the world is better off with a life cover. But you need to ascertain factors like the needs of your loved ones, the coverage they require and, of course, your personal budget.
- Check If Your Existing Plan Is Adequate
A lot of companies offer life cover to their employees. If you already have a policy, look into the details—is the coverage adequate and does the policy remain active if you switch jobs or retire? Knowing exactly what you need from the insurance plan is the very first step to figuring out the best one for your needs.
- Consider Your Debts and the Expenses That Require Coverage
Take a measure of all the money that you owe. Any house or vehicle loans, bank or business debts all need to be taken into account and provided for, so your debts don’t end up becoming a cause of trouble to your loved ones after your demise. Look at the current living expenses of your loved ones so you can ascertain the adequate coverage for them. If you are a parent, you’d do well to take in to account the cost of your child/children’s education.
- Calculate the Insurance Coverage You Need
Make a list mentioning your financial resources, the debts and expenses you need to clear and the expenses that will need coverage. The basic way of calculating how much life insurance cover you need is to add up all the expenses and all the resources separately, then subtract the sum of your financial resources from the total expenses that require coverage. A lot of insurance companies have online calculation tools on their websites that can give you a more exact figure of the insurance coverage you need simply by inputting the required data.
Decide if You Need Term Life Insurance or Permanent Life Insurance
When it comes to buying an insurance cover, you’ll come across the two different forms of covers- term and permanent cover. It’s essential you understand what each of these mean and have to offer.
- What is Term Insurance?
Term insurance is a type of cover that offers financial benefits to the nominee/nominees in the event of the insured person’s death during a certain term or time period. There are no maturity benefits if the insured person doesn’t die during the term of the policy. Also, the premium to be paid for a term insurance plan usually gets higher over time. Term insurance plans are popular with the age group 25-30 years, the low premium rates being one of their most lucrative feature.
- What is Permanent Insurance?
A permanent or whole life insurance policy, on the other hand has comparatively higher premiums. Also, the premium amount is fixed and not variable like in the case of term insurance plans. These policies carry both death benefits and tax benefits, with the nominee/nominees guaranteed to receive the coverage amount and the premium paid towards the policy is exempt from income tax.
Unless premium is too much of a concern, a permanent insurance plan is a good idea for everyone who whose loved ones are financially dependent on them. Those interested in term plans should make sure to purchase a policy at the earliest as the premiums are the quite low for young people and tend to go up with age.
Look Into the Best Insurance Providers and Their Best Offerings
With something as important as your loved ones’ future at stake, it’s advisable to look for the most reputed and trustworthy insurance providers to take care of your insurance needs. A look into the company’s history, its performance in the recent past along with customer reviews and ratings can give you a good idea of whether it’s the right choice for you. Take time to go through the various plans they have to offer and pay close attention to all the terms and conditions.
Compare the Policies Online
Once you have shortlisted a few life insurance policies catering to your specific requirements, zeroing in on the right one can still be confusing. That’s where internet lives up to its hype. There are plenty of websites with comparison tools that can help you compare policies side by side, making it easy for you to pick the one that best serves your interests.
Picking the best life insurance policy isn’t merely the matter of making a smart investment, it’s of immense significance to your family’s, your loved ones’ future. Make sure you put in the required time and attention!