If there’s one thing constant in our lives –it’s change, as it is most often said. Change automatically means – uncertainty. There are times when uncertainty can cost you more than you expect it to. The times when you are unable to take care of your loved ones are probably the hardest. Isn’t it always better to be prepared to meet such situations without hesitating? This is precisely why every individual must avail a Life Insurance Policy. The requirement is all the more, if they happen to be the sole breadwinner for their family. Insurance is not what you think it is, nor is it what you don’t think it is. Confused much? Don’t be. A lot of things will come to light as you read on and know more.
First of all, you have got to understand that a Life Insurance plan is mainly to provide monetary cover for your family in the event of your unexpected death. For instance, when you pay your insurance premium regularly, you or rather your family will be eligible for the cover (which is a large sum that depends on the type of policy you have chosen). For instance, if you happen to pay a premium of 3000 to 5000 INR every month then when a claim is made, a cover of say 30 lakh will be provided by the insurance company. Now, take a look at the deciding factors for choosing the best life insurance policy (in India):
- Funds, income and expenses of your dependents
- Predictable future expenses (approximate)
- Their inheritance (left by you)
- The kind of lifestyle you want to leave them with
So, the next question in your mind must be: How to choose the best life insurance policy for your family? Make sure you choose what suits you best, and not something that sounds attractive at that point of time. Here are the basic steps involved in choosing the best life insurance policy in India:
1) Evaluate your Life Insurance needs
- Analyze and arrive at an estimate of the above mentioned factors.
2) Understand the various key terms involved:
- Risk cover – the compensation received upon a claim
- Return on Investment – your life insurance can also be used for investment purposes
- Unit Linked Insurance Plan – a combination of life insurance as well as investment
- Tax planning- every insurance scheme is deductible under Section 80C of the Income Tax Act
There are other terms you may have to familiarize yourself with, and it may depend on the life insurance policy type you choose.
3) Select a suitable policy
- Calculate the cover you require
- Select premium paying term and premium value
- Are you looking for bonus?
- Are you looking for accident cover?
- What is more important to you – risk cover or investment returns?
These are some of the questions you must be able to answer in order to get the maximum benefit out of your Life insurance policy.
4) Last but not the least, never forget to: Read the Fine Print!
Most of the issues with Life Insurance policies occur because of lack of awareness of the various procedures involved. Educating yourself with relevance to these life insurance policies, will help you a long way in Life, and after your death.