As your life goes through major changes and responsibilities grow, it becomes increasingly important to secure the future of your loved ones. Buying a life insurance policy is one excellent way to do that.
If you're the sole breadwinner of the family, a life insurance policy is indispensable to your financial planning and an effective tool to ensure your family's financial stability in your absence. Besides financial security, investing in a life insurance policy offers you the benefits of saving for the future and tax benefits, helping you get the best out of your financial planning.
However, choosing the right life insurance policy cannot be a hasty decision. It can be daunting to compare plans and coverages as a beginner. Fortunately, most life insurance providers offer a simple, hassle-free process to buy a life insurance policy.
Let's get into the details.
Steps for buying a life insurance policy
Here are the simple steps you can follow in choosing a suitable life insurance policy for your family's secure future.
#1. Identify your life insurance goals
The first step of any major financial decision is to assess your goals. If you're the sole earning member of the family, it makes great sense for you to invest in a life insurance plan to take care of your family. Identify your goals to choose a life insurance plan that best suits your needs. For instance, if your family's secure future is your primary goal, then buying a term insurance plan with high coverage is a smart choice.
On the other hand, if you want to fund your child's higher education or build a retirement corpus, a unit-linked insurance plan will offer you the dual benefits of investment and insurance for your long-term goals.
#2. Consider how much coverage you need
Simply put, how much would your family need to manage their financial obligations and sustain life upon your death? When you apply for a life insurance policy, you don't want coverage so low that your family struggles with managing their regular expenses. Nor should it be too high that you end up paying hefty premiums.
Ideally, many financial advisors suggest having life insurance cover ten to fifteen times your annual income. Additionally, you also need to consider other financial obligations like debt to determine your life insurance coverage. So, you need to account for
- Your family's total expenses for the number of years income replacement might be necessary
- Your existing debt obligations
- The total amount you want to set aside for your child's education, wedding, etc.
Consider these future expenses and your existing investments to calculate your life insurance coverage.
#3. Shop around and determine the investment amount
Once you've figured out the type of insurance and coverage amount you need, it's time to start your hunt for reputable life insurance providers and compare their plans. Spend some time on the internet to research various providers, read customer reviews and check out their plans that fit your needs.
Besides, life insurance is a life-long commitment. While you should opt for insurance coverage big enough to meet your family's needs, it should also fit within your monthly budget. So, it is important to review your budget to choose a suitable insurance term and make your monthly premiums affordable on the pocket.
You can get in touch with a qualified insurance policy agent to design a plan that can consider all these aspects and meet your long-term needs.
#4. Submit your online application
Today, most insurance companies offer a hassle-free application process to buy life insurance. Once you choose your insurance provider and plan, submit an online application along with the necessary documents. While doing so, it is important to disclose any health-related information with your insurer as well as read through the fine print to avoid any legal trouble or claim rejection in the future.
#5. Prepare for the medical exam
Most life insurance providers will require you to go through a medical exam. After you've submitted your application and completed the documentation process, the insurance company will schedule a medical exam to make sure you don't suffer from any terminal illness.
#6. Start paying your premiums
If everything checks out, the insurance provider will accept your application, and your decided premium amount will get locked. Once the life insurance policy is active, you can start paying the premium to secure your family's financial future.
Things to keep in mind before buying life insurance
The process of buying life insurance is a breeze, thanks to digital application and documentation processes offered by most providers. However, there are a few things you must keep in mind while doing so.
#1. Policy tenure
While buying a life insurance plan, it is necessary to pick a policy tenure long enough to help meet your family's financial needs. Ideally, the term of the policy should be the number of years your family might be dependent on you.
#2. Insurance policy provider
Before opting for life insurance, don't forget to research the insurance companies and assure yourself of their credibility. Look for factors like maximum coverage, ease of application, benefits, claim settlement ratio, claim settlement process, and so on to arrive at the right decision.
#3. Claim settlement process
Make sure that your insurance company offers an easy and quick settlement process to help your family get the necessary funds without any stress.
#4. Additional coverage
You must also consider add-ons on your life insurance plan, such as critical illness rider, disability rider, accidental death benefit rider, and more, to get the best out of your insurance policy.
The bottom line
Life can throw a curveball at any time. Investing in life insurance is a simple way to get comprehensive protection for your family to ride through the hard times. Get in touch with Tata Capital to choose from our broad range of protection plans, specially designed to secure your family's future.
Visit our website to know more.
31 July 2023
5 mins read
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