Looking ahead to the future is sometimes scary. We all want assurance our family, children, and parents will be safe and happy, even when we are no longer there. A life insurance plan is exactly the solution in such cases.
You might as well call it an umbrella to protect you on a rainy day. It is a pledge you give to protect your loved ones in their difficult times.
Step 1: Learn about Life Insurance
First of all, you have to understand why you need something before making the purchase. A life insurance plan is a legal contract between you and an insurance firm.
- You pay a small amount of money at certain times. This is called a premium.
- In exchange, the firm promises to pay a large sum of money to your family if you die.
This money can be used by your family to buy food, pay for the education of children, pay the mortgage, and meet other necessary expenses. It ensures that their life does not come to a standstill when you are permanently removed.
Step 2: Understand The Two Major Categories
In India, there are a lot of different types of insurance available in the market. If you want to keep things on the simple side, then only get to know about the two main kinds:
- Term Life Insurance (Pure Protection): Imagine being a smart shopper who buys safe products at the cheapest cost. With Term Plans, this is exactly what you do: safety at the lowest possible price. Now, if you stay healthy and survive the plan till the end, you get nothing back. But if, unfortunately, you pass away during the plan, your family receives a large sum of money.
- Investment Plans (Savings + Protection): These plans can be compared to your regular two-in-one shampoo and conditioner kind of product. You pay quite a bit more. A portion is set aside for your protection, and the rest is invested for your future. If you are around for a long time, you get back your principal amount plus some profits.
If you want the most safety for the lowest price, you should buy term life insurance. It is the simplest and most honest way to protect your family.
Step 3: Determine Your Family’s Financial Requirement
How can you tell how large your “umbrella” needs to be? If the amount is too low, your family will find it difficult to survive. If it is too high, you will end up paying a lot more money each month than necessary. In India, one of the best guidelines is the 10 times rule.
Take the money you make in a single year. Then multiply that figure by 10. According to this method, that should be the minimum amount of life insurance cover you aim for. Say, if your annual income is ₹5 Lakh, then your insurance cover should be at least ₹50 Lakh. In case you have big loans like a home loan, that loan amount should be added to your total insurance cover as well.
Step 4: Pick the Right Time to Buy
When is the best time to get insurance? Well, the answer is quite straightforward: right now. When you are young and in good shape, the insurance company thinks that you are a low risk. For this reason, they charge you a very small amount of money. And the nicest thing? That little price remains unchanged for your entire life. If you decide to buy later in life, the cost will be exorbitant. Getting a policy at an early age will save you a lot of cash.
Step 5: How to Choose the Best Insurance Company
There are numerous companies in India. Here are three simple steps to look for a reliable one:
- Claim Settlement Ratio (CSR): This is a percentage figure. It indicates how many claims the company disbursed out of every 100 requests they received. Always choose a company with a CSR above 95%. This shows that they honor their commitments.
- Excellent Customer Service: Pick a company that not only handles your calls swiftly but also shows you the courtesy you deserve.
Streamlined Procedure: Both online and offline paperwork should be user-friendly and not loaded with obscure terms.
Step 6: Step-by-Step Guide to Buying Your Plan
It’s one thing to understand the concepts, but buying your policy the right way is another. Here’s the safe way of going about it.
1. Compare plans online:
Visit a reliable insurance comparison platform in India. Enter your age and the amount of coverage you want. Then, evaluate various plans side by side.
2. Fill out the form honestly:
The insurer will check about your health, employment, smoking/drinking habits, etc. It’s always better to be completely honest. Remember, if you hide a health issue now, the insurance company may deny your family benefits later.
3. Do your medical check-up:
Most often, the firm will arrange for a home visit by a doctor at no cost for a health examination. This is quite usual. It demonstrates your good health and determines your premium rate.
4. Read the policy rules:
Make sure to go through the main points before making a payment. Identify the “exclusions”; those are the items that your plan won’t cover.
5. Pay your first premium:
authorize a recurring payment from your bank account. This is the best safeguard against your policy being interrupted due to non-payment.
Conclusion
Purchasing a life insurance plan is the most selfless demonstration of your love towards your family. It is showing that you care about their mental comfort. Begin with a modest amount, pick what fits your budget, and get it done without delay. Your future self will appreciate you for today’s decision.