3 Factors you Need to Consider Before Buying Insurance Policy

Insurance Policy

A life insurance policy is one of the most important investments a person can make in his lifetime. It’s one of the few investments that come with a guaranteed amount to safeguard the financial future of one’s family should the policy holder pass away. While all other types of investment can take between days to weeks to liquidate; life insurance policies come into effect much faster, and thus, the amount gets paid to one’s family sometimes within as little as 24 hours depending on the service provider.

InsuranceWhat is a Life Insurance Policy?

The best life insurance policy is an investment instrument that guarantees a sum assured in the untimely passing of the policyholder to their family. By making regular premium payments over the course of the policy, a person can also take advantage of the savings/maturity component that some plans offer to build up a solid corpus once the policy has matured. Moreover, there are many other benefits that one may get on such policies including critical illness cover, accidental death benefit, accidental disability benefit, accelerated death benefit, pension payouts, etc. depending on the policy type.

Now that we have discussed life insurance in general. Let’s look at a few types of insurance policies that you can choose between!

Term Life Insurance: A term life insurance policy is a pure life policy that doesn’t come with any savings or maturity component and only guarantees a sum assured to the policyholder. This is paid out as death benefit to the nominee (s) in case the policyholder passes away while the policy is in effect.

Term insurance With Return of Premium: This type of policy is an extension of the term insurance; the only difference being that should the policyholder survive the duration of the policy, they are entitled to receive the premiums that they had paid to keep the policy in effect.

● Unit Linked Insurance Plan: This is market-linked insurance policy that can give you greater returns by investing a percentage of your premium into market-linked plans such as debt and equity funds.

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● Endowment Policy: This insurance policy is a life cover along with a savings and maturity component. By regularly making premium payments the policyholder is entitled to a lumpsum amount at maturity making it a great investment plan to build a retirement corpus. In case the policyholder passes away before the maturity period is reached, the sum assured along with any accrued bonuses is paid to the family members of the policyholder.

● Whole Life Insurance: This policy stays in effect as long as the policyholder is alive, or up to 100 years of age. In case the policyholder crosses the age of 100, they are eligible to receive a maturity benefit under this policy.

● Retirement Plans: These life insurance policies help you plan for your retirement by aiding you in building a solid post-retirement corpus. You also have the option to receive a lumpsum amount, regular payouts, or a combination of once the policy has matured.


Things To Consider Before Buying Insurance

If you are planning on buying the best life insurance, there are certain criteria that the insurance service provider and the policy must meet to be considered. Let’s have a look!

The Reputation of the Insurance Service Provider
The reputation of the insurance service provider is very important as its an indicator of whether they can meet their commitments. Look for things like service record, assets owned, solvency, number of subscribers, and claim settlement ratio to get a clear picture of how they are when it comes to market performance and customer satisfaction.

Claim Settlement Ratio
A higher claim settlement ratio indicates that the insurance service provider is honoring claims of their subscribers without giving them a hard time. It’s important to always buy insurance from a service provider who is known for high claim settlement ratios, if you want complete peace of mind should the need ever arise, the insurance company is going to honor your claims.

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Additional Benefits
As far as life insurance policy is considered, look for additional benefits such as critical illness cover, accidental death benefit, accidental disability benefit, among others to get the most value for your money. The best life insurance policy will almost always give you these benefits as part of the policy plan.

Getting a life insurance policy is something that you shouldn’t delay at all. It’s one of the only ways of ensuring your family’s sound financial standing, as well as planning for your future financial goals. So, whether you want just a pure life cover, or want to build a corpus for your retirement; it’s important to invest in a life insurance policy right away.

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