To know the need for insurance cover, you can take the help of a free calculator available on the personal finance website..
The financial year is moving towards the end. The deadline for handing over the proof of investment would have arrived in your office. At such times, the number of people investing in tax-exempt schemes increases.
Many people buy wrong insurance products in this haste. If you want to buy a life insurance policy, then we are telling you 10 things that you should keep in mind.
1. Decide on insurance cover and budget
How much life insurance cover do you need? First find the answer to this question. For this, you can take the help of a free calculator available on the personal finance website. Insurance policies actually work on the principle of indemnity.
You should look at it from the point of view of compensation for risk, not from the point of view of investment or profit. The general understanding is that you should take at least 10 times of your annual income as life insurance cover.
2. From which company to buy life insurance policy?
You need to look at the claim ratio of the company while buying a life insurance policy. Financial advisors say that if you are buying a term plan, then give priority to those companies whose claim ratio is around 95%. You can easily check this on any insurance aggregator site.
is possible that the term plan of a company with a better claim ratio may be costlier in terms of paying the premium. But you should choose that. Private insurance companies also sell policies online. They are relatively cheap. Therefore, depending on your budget and the amount of insurance cover, decide from which company you will buy the policy.
3. Distribute life insurance cover.
If you have taken life insurance cover for a higher amount, then you should divide it into two companies. This means that if you take a cover of Rs 60 lakh, then you should buy a policy with a cover of Rs 30 lakh each from two insurance companies.
There are two advantages of doing this. First, if the person who bought the insurance dies, the family members claim compensation. If it is rejected by one insurance company for some reason, then there will be a possibility that it will be approved by another insurance company.
If the need for insurance decreases after a few years, then one policy can be surrendered and another life insurance policy can be continued.
4. Policy Term
How old should the policy be, it matters a lot. Generally, by the time people retire, most of the financial responsibilities have been fulfilled. That’s why you should take such a life insurance policy which is ending around your retirement age.
5. Give Correct Information
Honesty is the best policy in life. If you are buying a life insurance policy, then fill the proposal form yourself. Be careful in disclosing all the important facts in the insurance policy.
You should give information about your existing diseases (diabetes, high blood pressure etc.). Nowadays, there are many such techniques which can accurately investigate your health. If you do not fill the correct information in the proposal of the insurance policy, then your claim may be rejected.
6. Which life insurance policy to buy
Visit a website that compares premiums and features of insurance policies. Compare insurance policies here. Check out the features of these insurance policies and your need for insurance. Include two to three good insurance policies in the scope of your search.
After this, read the reviews of these insurance companies on two-three websites on the Internet. Before choosing a life insurance policy, have a quick look at its benefits. After this you look at the hidden cost of life insurance policy. Only after this decide to buy an insurance policy.
7. Regular or Single Premium?
In many life insurance policies, you have to pay the premium only once. While there are many policies in which you have to pay premium at a regular interval. Generally financial advisors advise you to take a life insurance policy with regular premium. In this type of insurance policy, you get the benefit of income tax on the premium amount.
8. Understand the difference between insurance and investment
The purpose of buying a life insurance policy is to protect against risk. You invest to increase your wealth. Life insurance and investment should be kept separate.
Investing money in a combination of both life insurance and investment (ULIP product) neither fulfills your purpose of taking life insurance nor can you earn very good returns. This type of life insurance policy really costs you a lot.
9. Buy insurance policy online or offline?
After checking all parameters, you can buy term plan online from a good insurance company. Buying life insurance policy online is convenient as well as cheap.
10. Buy Insurance Policy in MWP
By purchasing a life insurance policy under the Married Women’s Protection (MWP) Act, it can be ensured that after the death of the insured, the compensation amount will go to his legal dependents or his family only. This amount of compensation will not be used to meet other liabilities of the deceased.
