Purchasing a life insurance policy is considered to be a wise financial move by many. This is because such policies serve as a financial safety net for the loved ones of the insured and help them shoulder account for financial liabilities in the event of their untimely death.
While life insurance policies help build a corpus for the future, not all policies are equal in terms of the the offering. In other words, life insurance policies tend to vary in terms of coverage value, add-ons, and premiums. All of these make it mandatory for individuals to practice dos and don’ts when looking for a life insurance plan to make an informed choice.
Read along to find out what to follow and what to avoid when seeking a comprehensive life insurance policy.
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A List Life Insurance Dos
Here are a few life insurance dos that you must follow –
Do start a life insurance policy early in life
Did you know life insurance premiums tend to inflate as one gets older?
This is because insurance providers consider older individuals risky as they are more prone to illness. This is why it is highly recommended to get a life insurance policy at an early age to avail the best coverage at affordable premiums.
Do compare insurance providers
To ensure you get the best insurance plans at a competitive rate of interest, make sure to compare the leading insurance providers. To begin with, get quotes from multiple insurance providers or compare their premiums online. Subsequently, check their terms and conditions related to claim settlement, and exclusions to gain a better idea about the provider’s expertise and limitations. One can also use an insurance premium calculator to understand which provider extends affordable plans and how much they would cost you.
Do get adequate coverage
Before settling for any coverage amount, individuals should do thorough planning.
Firstly, they should calculate how much money would their dependents need to sustain their current lifestyle. Subsequently, they should account for outstanding debts and daily liabilities. Lastly, they must also factor in inflation to arrive at an amount they deem would sustain the dependent for a substantial period. One can use an insurance premium calculator to determine whether the cost of the insurance policy will suit their budget and provide them with high coverage.
- Do review insurance policy
Insurance companies offer individuals the option to upgrade their policies. This allows them to increase their coverage value with an increase in their financial standing or corpus requirement. Some insurance providers may also allow individuals to downgrade their coverage to affordable premiums with ease. Individuals should take advantage of this and review their insurance policy and their financial standing and goals frequently to ensure all three are aligned with one another.
Do check available riders
A rider is an add-on feature that policyholders can avail of with their basic plan to enhance their coverage at an added fee. Based on one’s needs and requirements policyholder can pick a rider from among these:
- Hospital Cash
- Critical Illness Cover
- Accidental Death Benefit
- Permanent Disability Benefit
- Waiver of Premiums
Regardless, individuals should make it a point to check which riders are available in their existing plan and pick one as and when the need arises. This will make their plan more extensive and well-rounded. NRIs should also find out what riders are extended under NRI life insurance plans and whether taking them would enhance their coverage.
Do keep a copy
Individuals must keep a copy of the insurance proposal form, policy document, etc. In case of raising a claim, they should also keep a copy of the claim form. These will serve as a record and may come in handy later.
- Do find out which tenure suits you
While most insurance providers extend coverage to individuals till the age of 80 years, individuals have the leeway to choose a tenure that matches their financial plan. That said, usually a longer tenure offers better coverage and also allows us to build a better corpus.
A List of Life Insurance Don’ts
Prospective insurance buyers should make it a point to avoid these at all cost
Don’t wait to get insurance later in life
The longer you wait to get an insurance policy the higher the accompanying premium. This is because older policyholders are considered to be more prone to illness and some accidents, making them a risk-case for insurance providers. Delaying the act of getting an insurance policy also may leave your family unprotected in case some mishap occurs during the wait.
Don’t pick an unsuitable insurance type
Today individuals are offered an array of insurance policy options to choose from. While the availability and options have increased, so has the confusion. Hence, individuals should make a point to not get swayed by the overwhelming options and look for key features such as coverage amount, tenure, lock-in period, exclusions, premature withdrawal, and claim process. These features will help individuals compare policies and determine their merit. In turn, it will allow them to avoid picking a policy that does not suit their financial goals or financial standing.
Don’t hide medical records or skip the medical exam
Leading insurance providers require individuals to get a medical exam done. This is because based on the health conditions of the policy buyer, the insurance provider decides on the policy premium and suggests better coverage plans. Typically, individuals with existing illnesses are likely to a higher premium.
Some life insurance policies do not require buyers to get a medical exam done. However, such policies are usually more expensive and come with relatively less coverage. Additionally, it is advised to not hide one’s medical condition from the insurance provider as finding out the same during the claim verification can lead to a rejection if the death, illness, or accident has occurred because of the hidden condition.
Besides these, individuals must inform their family members about their investment in a life insurance policy and keep them involved in the process. Additionally, inform them of the account number and claim process in advance. This will help them take necessary steps in case of a mishap and intimate claim in time.