5 Key Factors To Consider And Evaluate Before Buying Life Insurance Policies

                                                                     

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Death is inevitable for all living being. This is a fact and all are aware this. But there are a few who think of a contingency plan, in the form of financial support, in their absence, for those who are left behind. They may be aged parents, wife and very little ones.

The aim of a proper life insurance policy is to protect the future of those who are left behind. The, the first and foremost duty of every head of the family is to protect the future of their loved ones, with the help of an suitable life insurance policy. 

Another major benefit of a policy is that if the policy runs for full term and no misfortune happens, it will yield a considerable savings and tax benefits too. 

But one must guard against choosing the wrong or defective 'life insurance policy' which may be of no use to the family in the event of a sudden misfortune. 

Nowadays, innumerable number of life insurance policies are available online or offline, offered by hundreds of companies. 

One must be very cautious before entering into an agreement with an insurance company for a life insurance policy as this may cost very dearly in future. 

To do this, one has to compare various life insurance policies from 5 different angles and select the right one which will give enhanced savings and let the members of the family remain unaffected financially, in case of an unfortunate event.

5 Simple Ways To Compare

i) Sum Assured

This is the sum which will be paid by the insurance company to the family members of the insured in the eventuality of death.In addition to this, bonus will also be payable. Traditionally, the sum assured should be at least 20 - 25 times of the present annual income of the insured. 

So, if your annual income at present is Rs.4 lac, you should target an assured sum of Rs.80 lac to Rs.1 Crore.

ii) Monthly Income Option

Some insurance companies offer the benefit of monthly income to the family members also. Under this plan, a part of the sum assured is paid to the family in the form of monthly income over a fixed period, say 10 or 15 years, in case of death. The remaining part of the sum assured is disbursed immediately.

So, you must make sure, the amount that will be paid monthly over a fixed time period, is going to support your family sufficiently or not. You should go for those policies which offer extended period of time.

iii) Amount of Premium must be        Affordable with Maximum Cover

Payment of a pre-determined amount of premium either monthly/quarterly/half yearly or annually over a fixed period of time is a must to get a life insurance policy. The larger the sum assured the bigger is the premium.

Single and limited premium plans are also available with several insurance companies. Affordability is the first thing to be considered while deciding upon the amount of premium. It means the normal and daily course of life must not be affected under the burden of the premium.

Single premium policy may not be affordable for the majority of us as the premium is heavier. While picking up a regular premium plan policy, one must ensure that the sum assured is more than 100% of the total premium to be paid for the full tenure of the policy.

Tenure of the policy is also very important. As, the longer the tenure the lower the premium and the shorter the tenure the higher the premium. 

This is advisable to go for a reliable life insurance policy immediately at the start of career, as the amount of premium remains considerably lower at this age and the tenure is longer. 


iv) Accidental & Critical Illness     Cover

Riders such as accidental and critical illness covers are additional benefits that come with several life insurance policies nowadays. These riders are extraordinary features and offer excellent security to the insured. 

Big players such as 'HDFC Life' offer their term insurance policies as '3D' cover (death, disease and disability). In case of total disability or critical illness the insured gets a 100% waiver on future payment of premiums along with the payment of sum assured. 

So, while choosing a life insurance policy, do look for these riders.

v) Claim Settlement Ratio

Claim settlement ration is a crucial factor as far as the credibility of the insurer is concerned. One can get a glimpse of this ratio by going through the reports of IRDAI (Insurance Regulatory and Development Authority of India) the real watchdog of the insurance sector.