6 Tips To Keep In Mind While Choosing Life Insurance Policy
Life insurance is increasingly becoming an instrument of choice for individuals to help financially safeguard their families against any untoward incidents. Not only this, but specialised plans also act as investment options that help plan for important financial goals like milestone planning and retirement planning.
However, because of the product's complexity and not being well-versed with the legal terms used in the purchase agreement, customers sometimes make mistakes while selecting a suitable life insurance policy. Further, given the different types of insurance plans available in the market it becomes difficult for customers to choose the appropriate plan for their financial needs.
To get the most out of your life insurance policy, one must keep in mind these 6 tips while purchasing an insurance plan.
- Purchasing the policy at the right time
In general, the later you purchase an insurance policy, the more the premium you will pay. As a result, delaying the purchase of life insurance costs you far more than the money you save. Also, the longer you have a policy, the more effective it will protect you. People postpone buying life insurance due to many reasons. Young people in their 30s do not see the value in purchasing life insurance. The COVID 19 pandemic, however, has changed many people's minds. Premiums are low for people who are young, therefore it is a good idea to lock in while rates are low.
- Investing in a term plan
A typical term plan holds a very important position in your investment portfolio as they can be the financial support to the policyholder’s family in case of an unforeseen incident.
- Providing complete and authentic information
Many claimants are now being aware that insurers will deny claims if it is found that critical information was not disclosed by the policyholder while purchasing the policy such as any premedical history, family medical history and way of living lifestyle such as smoking, involving in any hazardous vocations etc. If a person dies because of a reason which was not disclosed or for which false documents were presented at the time of purchase of policy, claim may be denied. It is therefore critical that you share all necessary information, so that a suitable protection plan can be offered to you.
- Thoroughly reading the life insurance plan
To get a good notion of what you are purchasing and how an insurance procedure works, you must completely review the coverage, terms and conditions, and other details mentioned in the product brochure. Before obtaining term insurance, do some research on your own and read the plan thoroughly to ensure it suits your financial purpose.
- Ensuring the Sum Assured is sufficient
Purchasing life insurance at a young age is a wise decision, but there are certain long-term considerations to keep in mind too. The coverage you started with may not be enough when your circumstances change. Certain important occasions or stages in life will necessitate a higher level of protection. Your initial life insurance policy may be insufficient to satisfy the demands of an expanding family and it is critical to periodically assess your life insurance policy and ensure that the sum assured is sufficient.
- Keeping your family informed
It is highly recommended that you inform your family about the insurance cover/term plan in which you are investing to ensure your family gets the financial support in case of any mishappening. Imagine a policyholder’s family not being able to get the claim just because they had no knowledge of the policy or had no access to the original policy documents, would the policy be of any use then?
To sum it up,
Life insurance can wear many hats in your long-term financial plan. Following these tips while buying an insurance policy will ensure your investment in life insurance will stand by you and your family in times of unforeseen situations.
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