7 Factors to Consider When Buying Life Insurance

A life insurance plan is an important financial tool. It is a promise to keep your loved ones safe when they need it most for a long time. If you die, a life insurance policy can help your family pay for things they need, whether you're just starting a family, planning for your child's education, or thinking about a peaceful retirement. But it can be hard to choose the right life insurance policy. There are a lot of options, so it's important to know what really matters when you make this choice.

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Here are seven important things to think about before buying life insurance to help you make the right choice.

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What Are The 7 Factors To Consider Before Buying Life Insurance?

When purchasing life insurance, key factors to consider include your personal financial needs and goals, the required coverage amount and policy term, the affordability of premiums, and the insurer's reputation.

Decide how much life cover you need
Choosing the right sum assured is one of the most important steps in buying life insurance. A good rule of thumb is to select a policy covering at least ten to fifteen times your annual income. To determine the precise coverage amount, you can use a Human Life Value Calculator to make an informed decision.
Look at your family's lifestyle, monthly expenses, liabilities such as home loans, and important future goals like your child's education or wedding. Ensure the life cover meets these needs without putting financial pressure on your loved ones.
Choose the right type of life insurance policy.
Not all life insurance plans are the same. Different policies serve different purposes. Here are a few common types to consider:
- Term life insurance is best if you want high coverage at affordable premiums. It provides a large death benefit but does not offer maturity returns.
- Endowment plans combine life cover with savings. They offer maturity benefits if you survive the policy term.
- Whole life insurance covers your entire lifetime, typically up to 99.
- ULIPs or Unit Linked Insurance Plans offer the dual benefits of insurance and investment.
- Child plans help secure your child's future financial needs, such as education or higher studies.
- Pick a policy based on your financial goals, risk appetite, and protection needs.
Select the Right Policy Tenure
Your life insurance should last until you have paid off all of your important debts. Most of the time, this means until you retire or until your kids can support themselves.

For example, a 30-year policy term would be good for you if you are 30 years old and plan to retire at 60. A longer policy term can provide you with more peace of mind and help keep your loved ones safe.
Mode of Payment for Premiums
You can pay once, monthly, every three months, every six months, or annually. Some plans also let you pay for a few years but stay covered for the whole term. Select the option that best suits your needs and is the most cost-effective.
Terms and Conditions of the Policy
You should read the fine print of your life insurance policy very carefully. Find out how long you have to pay your premiums late and if there is a waiting period before some benefits start. Additionally, learn about other important details, such as the nomination rules, the option to borrow against the policy, and the fees and value associated with early policy termination. These details can change how the policy works while it is in effect and when you make a claim.
Term Add-ons/Riders
This is the main parameter to consider before you buy a life insurance policy. You can generally buy riders at the time of buying your policy. There are different types of rider that come with a life insurance policy based on its type and the insurer. Here are some of the common riders:
- Accidental death benefit
- Accidental permanent and total disability rider
- Critical illness rider
- Waiver of premium rider
- Permanent disability benefit

You need to pay a small amount of premium for these term riders and then you can enjoy extra coverage and benefits, along with your base plan offerings.

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Choosing the Right Life Insurance Provider

Choosing the right company is just as important as choosing the right policy. A good life insurance company makes sure that your family doesn't have to wait or face problems when they file a claim. To look for a good life insurer, you can look at the below parameters and make an informed decision.

Claim settlement ratio: This ratio is the percentage of the total amount of claims received annually that the life insurer has settled. The higher the CSR, the better it is. This simply means the insurance company pays out the right claims quickly.
Solvency ratio: This ratio is the metric used to assess a company's ability to meet its long term financial commitments and debt obligations. It shows the strength of the company’s cash flow. The higher the ratio, the better it is, because it shows that the insurance company is solvent enough to promptly settle claims.
Existing customer reviews: This will make you understand the important insights of how convenient the experience of the user is. Check for any repeated complaints and how good the sales service is.

Wrapping It Up

Think about your current stage of life and your financial obligations before choosing a life insurance plan. This will help you figure out how much coverage you really need and for how long. Checking the insurer's claim payout history is another way to find out how reliable they are. Read the policy terms carefully, make sure the premium fits your budget, and look into add-ons like critical illness or accidental death benefits that can give you more protection.

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FAQs

Q: How do I figure out how much life insurance I need?

Ans: The best amount of life insurance for you depends on your debts, dependents, current and future income, and assets. Most of the time, you should get a cover that is at least 10 to 15 times what you make in a year. If you make ₹10 lakh a year, for instance, you should aim for at least ₹1 crore in life insurance. A Human Life Value (HLV) Calculator can also help you get a better idea of how much it will cost.
Q: What things affect the premium cost of life insurance?
Ans: There are a number of things that affect the cost of your life insurance policy, such as:
- Age: People who are younger pay less.
- Health Condition: Rates can be affected by your medical history and any pre-existing conditions.
- Type of Policy: Investment-linked policies cost more than term plans.
- Smoking and Lifestyle: Smokers and people with dangerous jobs may have to pay more for insurance.
- Policy Term and Sum Assured: Premiums go up when the policy lasts longer or covers more.
Q: What is the most important reason to get life insurance?

Ans: The main reason to have life insurance is to make sure your loved ones are financially safe when you're not around. It makes sure they can pay their bills, pay off their debts, and keep their standard of living.
Q: What factors should you consider before you buy life insurance?

Ans: Before you buy life insurance, think about your responsibilities first, not the product. Consider who relies on your money and for how long. The policy features don't matter as much as your age, family situation, current loans, children's education, and future costs. Don't just look at what you can afford right now; see how much coverage your family would really need if you weren't there. Check the policy term, premium commitment, and whether it fits with your long-term goals. You should also check the insurer's history of settling claims, the terms of the policy, and any exclusions so that there are no surprises later. A good life insurance policy should protect your family's way of life without putting a strain on your current finances.
Q: What is the 7-year rule for life insurance?

Ans: When it comes to life insurance, the 7-year rule has more to do with taxes than with coverage. In India, it refers to how some life insurance policies are taxed when the premiums go over a certain amount. If a policy is canceled or ends within the first seven years, the tax benefits that were claimed before may be lost, or the payout may become taxable. This depends on the type of policy and how the premiums are set up. In short, life insurance is a promise that lasts a long time. If you leave too soon, your benefits may go down and your taxes may not be as effective. You should stay invested for at least seven years to keep the policy's tax and financial benefits.

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˜The insurers/plans mentioned are arranged in order of highest to lowest Sum Assured(SA) offered by Policybazaar’s insurer partners offering term insurance plans on our platform, as per ‘first year premium of life insurers as at 31.03.2025 report’ published by IRDAI.

Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. For complete list of insurers in India refer to the IRDAI website www.irdai.gov.in

Rs. 400/month is starting price for a 1 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

Rs. 400/month (Rs.13/day) is starting price for a 1 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 230 is starting price for a 50 lakhs term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

+Rs. 8/day is starting price for a 50 lakhs term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

+Rs. 12/day is starting price for a 75 lakhs term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

+Rs. 497/month is starting price for a 1.5 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 487/month is starting price for a 2 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 626/month is starting price for a 3 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 905/month is starting price for a 5 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. ₹360/month is the starting price for a ₹99 lakhs loan cover with an 8% interest rate for an 18-year-old male, non-smoker, with no pre-existing diseases, loan tenure up to 20 years, rounded off to the nearest 10

+Rs. 1,267/month is starting price for a 7 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

*The full refund of premium is available on availing the one-time option of refund of premium. Total premium paid for policy (paid for add-ons) will be the special exit value, payable on availing the one-time option of refund of premium if you wish to completely exit the policy.

+Rs. 447/month is starting price for a 1 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs.679/month is starting price for a 2 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 910/month is starting price for a 3 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 1,374/month is starting price for a 5 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

+Rs. 1,924month is starting price for a 7 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 30 years of age.

Women

+Rs. 400/month is Starting price for a 1 crore term life insurance for an 18 year-old Female, non-smoker, with no pre-existing diseases, cover upto 30 years of age, rounded off to nearest 10.

Rs. 461/month is the starting price for a 1 crore term life insurance for an 24 year-old female, non-smoker, with no pre-existing diseases, cover upto 54 years of age.

1,642/month is the starting price for a 1 crore term life insurance for an 44 year-old female, non-smoker, with no pre-existing diseases, cover upto 74 years of age.

Prices offered by the insurer are as per the approved insurance plans | #All savings and online discounts are provided by insurers as per IRDAI approved insurance plans | Standard Terms and Conditions Apply | **Tax Benefits are subject to changes in tax laws.| Policybazaar Insurance Brokers Private Limited

We will respond in the first instance within 30 minutes of the customers contacting us. 30-minute claim support service is for the purpose of giving reasonable assistance to the policyholder in pursuance of the claim. Settlement of claim (including cashless claim) is the responsibility of the insurer as per policy terms and conditions. The 30-minute claim support is subject to our operations not being impacted by a system failure or force majeure event or for reasons beyond our control. For further details, 24x7 Claims Support Helpline can be reached out at 1800-258-5881

For more details on risk factors, terms and conditions, please read the sales brochure carefully before concluding a sale

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