Brief Guidelines for Buying the Right Insurance Policy

Though we are all aware that life insurance provides an umbrella of security to our family from any unfortunate events and helps us in protecting from financial losses or going through uncertainties, but choosing the right cover for yourself and your family is essential. Before opting for or investing in a life insurance policy, individuals should understand their needs and requirements first, as there are diverse investment options available in the market. The life insurance industry offers several options, such as term covers, various traditional and unit-linked insurance plans.

Benefits –

Life insurance come with the triple benefits of investment, tax advantage and security and is perfect for your long-term life objectives. Life Insurance strategy should depend on the stage of your life, your life goals and the overall liabilities you have. So planning before investing is critical to opt for the product which is most suitable to match each of your life goals. For e.g. you are keen to invest in an insurance policy, where you get some ‘returns’ from the policy in addition to the life insurance cover. So you might invest in an endowment plan, ULIP or term insurance with return of premium policy. Here the aim would be that the product you buy should help your investments grow over the long term by investing in the changing markets scenario. Markets have shown to give out favourable returns over the long run, and ULIPs and other similar products not only help to invest in the markets but also to manage downside risks. Apart from this, the chosen product should help you manage any income loss which might happen during critical illnesses. Critical illness and health products schemes formulated by life insurance covers work differently and it should be added to a reimbursement health cover.

It is advisable to buy a life insurance plan early in life as then, the premium pay-out is much less and the benefits are large which can help you achieve long-term goals such as buying a house or planning for your retirement.

It is important to follow the standard thumb rules before making an investment in any insurance policy.

1. When investing in life insurance, it is always advisable that you have an adequate life cover first, here your life cover should have a minimum cover which is ten times your annual earnings, so that all the dues and liabilities are covered for your family and they are not burdened by it.
2. Apart from this, other unavoidable expenses like home, children’s education, marriage etc. should be kept in consideration while making an investment in the insurance policy.
3. It is very important to verify the background of the insurance company in which you plan to invest for the policy. Every detail including its portfolio and previous claim settlement ratio should be checked.
4. Always check out the various options available in the market, compare them and then buy the most appropriate plan. You can easily do an online check and comparison on online portals before the final decision.
5. If investing in a product like ULIP, do check the fund performance. Details of their fund’s performance have to be updated by all the insurance companies online. The stability and consistent track record of the fund is essential here.

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