Today everyone understands the importance of life insurance as life saver for the family after one’s demise. There are different ways adopted by people in order to buy the so very important life insurance policies. Few call upon agents for assistance whereas others do it themselves online. However, there are few things to note before buying life insurance policy:
1) How much Insurance do I need?
Do not simply buy life insurance just because someone has said so. If you know the importance of life insurance, begin with this. The first and foremost thing you have to do is to calculate the amount of insurance your family would need to maintain the same lifestyle post your demise. There are online tools to help you with this. Out of many methods, the most preferred one is to calculate insurance based on expenses. There might be cases where a person does not need life insurance at all. It could happen when one does not have dependents or when one’s net assets are enough to take care of the family’s needs.
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2) What is the claim settlement record of the Insurer?
Once you have decided to buy insurance, you need to shortlist the insurance company who provides it for you. There are tons of insurance companies in the market. Some are popular for service and some are popular through their ads. However, your utmost concern should be the claim settlement record of the company. It is the ratio of number of claims settled to the number of claims received. LIC is the leader with 97.73% followed by ICICI Prudential (96.29%), HDFC Standard (95.76%), SBI Life (94.41%), Max Life (94.25%) and Kotak Mahindra (92.04%). All these companies come close in terms of claim settlement ratio. You need to compare various other features such as premium, service, etc.
3) What type of policy do I need?
Decide the purpose of taking insurance policy. We recommend purchasing term plan if the purpose is protection. However, there are various other plans available for those looking to invest as well as insure themselves. You can choose among the following policies – money back, endowment, whole life, annuity, ULIP, etc. Choosing one among these depends on your need. If you want some equity exposure, you can opt for ULIP and stay invested for long term. If you want protection for entire life, opt for whole life.
(Also see: What insurance policy to buy?)
4) Do I already have insurance?
It might happen that you have already purchase life insurance long back. Before buying another policy, check how much you are already insured for. There are cases where employers provide life insurance to their employees. You can also consider this. You would then have to deduct this from the total insurance amount needed.
5) Should I buy Online or Offline?
Online insurance industry has drastically improved in the last few years. It could be either due to improved internet penetration or due to investor awareness. This has actually done a lot of good to the consumers. Online policies are cheaper than offline counterparts because there is no agent involved. However, if you are someone who doesn’t like DIY (do it yourself), go for the offline route. Also, agents could be handy when it comes to claim settlement. We recommend online mode because it is cheaper by at least 20-30% compared to offline mode.