Saturday, November 15, 2014

Important tips for buying Life Insurance Policy

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Important tips for buying Life Insurance Policy

Preparing for a family's future requires a lot more than saving, reducing and controlling expenses. Life insurance ensures that there is none or minimal disruption when the earning member meets with an unfortunate incident, in terms of debilitation or death. With a well-thought out and proper plan in place, one can mitigate the financial risks that will be borne by the family.

Yet, while there are many benefits that accrue from life insurance, it is important that proper attention is paid to the various aspects before investing in a policy. Here are a few things that one must bear in mind before buying an insurance policy.

Start early

The sooner you start, the better are your chances of providing a better financial backing to your family. The primary benefit of starting early can be lower premium, since insurance companies calculate the premium amount based on age of the individual. Thus, by starting early, an individual can reap the benefit of an extended cover at a lower cost.

Seek risk cover

Keeping in mind the unpredictability of things, right from life to markets, it is important to seek adequate risk cover based on the needs of the present and the future. The cover must be decided taking into account factors like inflation and growing needs. Know your right insure amount,

Buy policy that meets your objectives

Ensure that you pen down your objectives before buying a policy. For instance, what is the primary goal of the insurance -- to meet the education needs of the children or to enable financial security for the spouse, or both. When the objectives are clearly defined, buying a policy becomes easier. Some other objectives could be, financial safety or security from an unexpected accident, income returns or yields, growth of capital and tax benefits, to name a few.

Check for riders

Insurance Riders provide that extra protection which covers your individual needs over and above your basic policy. Also, the amount paid for insurance riders is much small as compared to the amount paid for a completely new cover. The benefits that an insurance rider holds help you overcome unexpected situations that may arise in future and are not covered in your basic policy. Besides these insurance riders also help you customize your insurance policy.

Flexibilities – loan, partial withdrawal, switching, policy benefit in instalments

One can enjoy a number of benefits from a life insurance policy. In an increasingly uncertain world, one needs to ensure that one's family is free from any financial burden, in case of any unfortunate event. Certain life insurance policies can secure your family from any kind of loan liability you may have, by creating a safety net which ensures that your family is protected from the burden and worry of any loan repayment in your absence.

Switching is also one important advantage offered by life insurance companies. An individual can switch from one fund to another in a Unit Linked Insurance Plan. Certain policies also offer policy benefits in instalments over a specified period of time.


 

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