Mostly everyone who has some financial knowledge knows the importance of life insurance. A good insurance plan is the best and the easiest way to ensure a secured financial future for your family. When you set out to buy a life insurance policy, you will be amazed to see the number of options available. It is natural for any individual to get confused. Buying insurance is not very difficult if you keep some basic things in mind. Let us discuss a few: Buying term life insurance policy.
Understand the Purpose
You should know and understand why you need an insurance. Never buy it out of peer pressure. Life insurance is taken to ensure that your dependents are taken care of if something were to happen to you. If you do not have dependents, you can avoid taking a pure term insurance plan. if you have dependents or are planning to start a family soon, you must take a good policy.
Assess the Coverage
One of the most critical things to do when buying insurance is to assess the sum assured. Being underinsured is as good as being uninsured. You should see your financial status and annual income and take a sum assured which will take care of your family to live comfortably. The thumb rule is to take about 10 times of your present annual income and include the debts you have to calculate the minimum amount.
Understand the Riders
Life insurance policies come with many riders. Your advisors and friends will ask you to opt for them as well. If you do not understand the riders and their coverage, there is no point in paying for them. If you understand them and are sure they will be helpful, you should opt for them.
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Do Not Hide Information
You must make sure that you give all accurate information to the insurance company when you are taking a policy. Hiding information or giving wrong information can be a problem at the time of a claim. Facts like you drink or smoke can increase premium, but if the company finds out at the time of a claim, they will reject it outright specifically in the case of non-medical policies. This will defeat the purpose to take insurance.
Know the Exclusions
Each insurance policy comes with a set of exclusions. These are clauses in which the insurance company will not pay the claim. It is important for you to know the exclusions and understand them. These are clearly mentioned in the policy document, and thus, you must read it carefully. Never hesitate to ask questions to the insurer.
Buy it Early
A term insurance must be taken at a younger age. A young insured is considered to be at a lower risk. The policy premium will keep on increasing as you grow older. It makes a lot of sense for you to buy it when you are young in order to save costs.
When you buy a policy, you will find there are many insurers in the market. Having a good insurer is as important as having a good policy. You must check the reputation of the insurer and their service standards. Consider a company with high claim settlement ratio. A company which rejects a lot of claims is never a good bet.
Usually, life insurance plans are standard products with similar clauses across products. When you buy a policy online you save money. This is because the premiums of online policies are lower when compared to buying through an agent. For a standard product, there is no reason to pay higher premiums. You can compare plans online and buy the one that suits your requirement the most. When you do your research, you will also have a better understanding of the product you are buying.
When keeping some basic things in mind, it is easy to choose a good insurance product. A common man might find the terms and concepts overwhelming, but if you do some research you will be able to understand all aspects. When buying an insurance policy, you are trusting someone for your family’s future. So, ensure you choose the best.
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