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Important Things to Look for in a Life Insurance Policy

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August 03, 2021

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A life insurance plan is a must-have for every adult who has financial liabilities. Once you have a good life insurance policy, you do not have to worry about how your family will cope if something happens to you. The payout from your policy will offer them a little financial stability during a difficult time. But, how do you go about finding the ideal life insurance policy for your needs? There are so many options available in the market today, many worry about making the wrong choice. We want to help you buy life insurance and clear your mind from any doubts or worries. So, here’s a look at what you need to consider before you buy a life insurance plan.

Important Features of Life InsurancePolicies

  • Affordability

    Once you purchase a life insurance plan, you will have to pay premiums at regular intervals. So, you must ensure that your policy is affordable. Making large payments every year might prove difficult. Your premium amount depends on a few factors like your age, gender, sum insured amount and the type of policy you have picked. When you’re younger, it’s easier for you to buy life insurance. Insurers consider young and healthy individuals as low-risk liabilities. Women also have a higher life expectancy than men. So, insurers may offer women better premium deals. Your sum insured directly impacts your premiums. So, a higher sum insured leads to a higher premium. Make sure you only opt for a sum insured amount that you need. If you choose a very high figure, it could cost you. Some people opt for whole-life insurance plans over term plans. If you do this, you will end up paying higher premiums. Term life insurance plan provide life cover for a specific time, while whole-life policies cover you until the end of your life. While the benefits of the latter may seem attractive, the premium disparity is quite a lot. Check quotes from various insurers before you make a decision.

  • Quick Payouts

    Some life insurance plans, known as simplified issue life insurance, have a hidden waiting period of sorts. If anything happens to you within the first two or three years, they may not provide the payout to your nominee immediately. Instead, they will delay the payment until this initial waiting period lapses. Always check the fine print of the life insurance policy you want to purchase. Make sure they offer you benefits right from the day you sign on the dotted line.

  • The Underwriting Process

    Every life insurance provider follows a different underwriting process. Some companies may reject proposals or levy higher charges if you are a smoker or have a health concern like diabetes. Shop around and find a policy that does not discriminate based on your health and lifestyle.

  • Auto Debits

    Once you purchase a life insurance plan, see if you can get the premium amount debited directly from your account. Since life insurance policies require only annual payments, it can be easy to forget. With automated debits, you do not have to worry about defaulting on your premiums.

  • Term Life Conversion

    Since term plans are most affordable, you probably purchased one when you were in your 20s or 30s. As you grow older, you may decide that you’d like to extend the cover to the rest of your life. Most term life policies offer a conversion feature. So, you can turn your term plan into a whole life insurance policy before the former expires. Some policies may not allow this, and you should steer clear of them.

  • Living Benefits

    A life insurance plan famously only helps once you’re gone. Today, people prefer opting for policies that provide benefits when they’re still around to enjoy them. Look for plans that offer monetary relief if you get diagnosed with a critical illness. You can also opt for term policies with a return of premium maturity benefit.

How Do I Save Money on Life Insurance?

To get the most value for your money, you can employ these tips to save money when you purchase a life insurance policy:

  • Compare Costs

    Never purchase the first life insurance plan you see. Take a little time to look at what’s available and compare costs. In today’s competitive market, you might find a policy with better benefits at the same price.

  • Choose the Sum Insured Carefully

    Many people make the mistake of purchasing a life insurance policy with an incredibly high sum insured. Work out how much you think your family will need in the next 20 or 30 years and opt for that as your sum insured.

  • Buy Sooner Rather Than Later

    When you buy life insurance when you’re younger, your premiums will be lower. So, buy the policy sooner rather than later to save money.

Life Insurance Policy– Simplified

Before you go out to buy life insurance, you must remember:

  • Term insurance is often the most affordable life insurance plan.
  • Compare multiple policies before you buy a plan. Opt for the highest benefits at the lowest cost.
  • Set up an auto-debit facility for premiums to avoid missing a payment.
  • Look for term plans that allow you to covert to whole-life policies.
  • Try to find a policy that offers you living benefits as well.

With this information, purchasing the right health insurance policy is easy.

Purchasing a term plan is quick and easy for everybody, but especially for working women. Make sure you shop around and compare policies before buying the best one for your family’s future.Show Full Article
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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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