Planning to Buy a Life Insurance Policy? Here's a Checklist
Today almost everyone understands the importance of life insurance. After one's demise, it is a life saver for the family. There are different ways adopted by people today for buying the so very important life insurance policies. Some call upon agents for assistance whereas others do it themselves online. There are five important things to consider before going ahead and actually buying a policy:How much cover do I need? Do not buy life insurance just because someone has suggested you to do so. If you know the importance of life insurance, begin with this. The first and foremost thing you have to do is to calculate the amount of insurance your family would need to maintain the same lifestyle after your demise. There are online tools to help you with this. Out of many methods, the most preferred one is to calculate the required insurance cover based on expenses. There might be cases where a person does not need life insurance at all. It could happen when one does not have dependents or when one's net assets are enough to take care of the family's needs.What is the claim settlement record of the insurer? Once you have decided to buy an insurance policy, you need to shortlist the company who provides it. There are tonnes of insurance companies or 'insurers' in the market. Some are popular for service while others are popular because of their advertisements. However, your utmost concern should be the claim settlement record. It is the ratio of number of claims settled to the number of claims received. At present, LIC is the leader with a 97.73 per cent claim settlement ratio, followed by ICICI Prudential (96.29 per cent), HDFC Standard (95.76 per cent), SBI Life (94.41 per cent), Max Life (94.25 per cent) and Kotak Mahindra (92.04 per cent). All these companies come close in terms of claim settlement ratio. You may also compare various other features such as premium, service, etc.What type of policy do I need? Decide the purpose of taking insurance policy. Purchasing a term plan is recommended if the purpose is protection. However, there are various other plans available for those looking to invest as well as insure themselves. You can choose among the following policies - money back, endowment, whole life, annuity, ULIP, etc. Choosing one among these depends on your need. If you want some equity exposure, you can opt for ULIP and stay invested for long term. If you want protection for entire life, opt for the whole life option.Do I already have insurance? You might have already purchase life insurance long ago. Before buying another policy, check how much you are already insured for. There are cases where employers provide life insurance to their employees. You can also consider this. You would then have to deduct this from the total insurance amount needed. And then, you may aim for a cover according to the additional cover required.Should I buy online or offline? Online insurance industry has drastically improved in the last few years. The reason behind this could be improved internet penetration or investor awareness. This has actually done a lot of good to the consumer. Online policies are cheaper than offline counterparts because there are no agents involved. However, if you are someone who doesn't like to go with the DIY (do it yourself) option, go for the offline route. Also, agents could be handy when it comes to claim settlement. Online mode is recommended because it is cheaper by at least 20-30 per cent compared to offline mode.InvestmentYogi.com is a leading personal finance portal. Disclaimer: All information in this article has been provided by InvestmentYogi.com and NDTV Profit is not responsible for the accuracy and completeness of the same.
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