You’re young, healthy, and living the dream, or at least starting to build your dream. Life insurance probably isn’t as exciting to think about as finishing your favorite Netflix series, but it certainly is something you should be thinking about. People insure their homes, cars, cell phones, laptops. When asked what the most important thing in their life is, they say family. Yet they are uninsured. The cost to protect you and your family can be as little as 60 INR per day. Protecting your family shouldn’t be an option but a priority. Whether you have children or not, you probably still have people that depend on you. Their lives would be hugely affected if you were to die. Not only would they be dealing with grief, but financial stress because of the loss of income.
Buying life insurance is like fixing a leak in your roof. The longer you wait, the more expensive it gets. When you are young, you are considered as a low-risk client for a life insurance carrier. Low-risk means better rates. The common dilemma that faces an individual once he understands he needs insurance – What is the best insurance policy? How to choose it? What are the things to keep in mind?
Here are some tips that will help you select the perfect insurance policy:
1. Is there a need for Life insurance?
Start with a deceptively easy-sounding question when choosing a life insurance policy. Life insurance needs vary depending on your personal situation — the people who depend on you. If you have no dependents, you probably don’t need life insurance.
If your salary is important to supporting your family, paying the mortgage or other recurring bills, or to sending your kids to college, you should consider life insurance.
2. Term or whole life?
If you are young and have inflow income for many years to come, then go for term life insurance to give a protective financial layer in case of your death and If you are looking for long-term retirement planning and also want a guaranteed death benefit along with investment option then whole life insurance may be a right answer.
3. Determine accurately the Coverage or Sum Assured
Calculating the Sum Assured is the most critical step. You do not want to make the mistake of under-insuring yourself. A general thumb rule is approximately 8-10 times your gross annual income minimum. Add your debts to arrive at your sum assured amount.
4. Take advantage of the “free look” period
Be sure to ask your company representative how long your free look period is and when it begins. If for some reason you don’t feel the policy is right for you, this is the time when you can change your mind with no financial obligation.
5. Buy from a reputable life insurance company
Your life insurance policy is meant to financially protect the people you love when you are no longer here to do so yourself. Do some research regarding the life insurance company that you are considering buying from.
6. Know the exclusions
All insurance policy will have some exceptions. These are circumstances under which the insurer says he will not pay you. Read the information carefully before investing. Know the exclusions. You must be aware of the product inside out.
7. Enhance your coverage with policy riders if necessary
When you select a policy, ask about the types of policy riders that may be available to you. Riders or endorsements are ways in which you can customize your policy to meet your needs and budget. Avoid adding riders if you do not understand them fully.
With the increasingly uncertain times, especially tumultuous financial markets and fragile economies, getting an insurance cover has become imperative. Choosing the right kind of insurance coverage can be the wild card in your financial plan.