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Ensuring your family's financial security is one of the most crucial decisions you can make. Life insurance is a safeguard, providing financial protection, savings, and tax benefits. However, choosing the right life insurance policy requires careful consideration of various factors to ensure it aligns with your financial goals and family's needs. Whether you are looking for a term plan to provide financial security or an investment-linked policy to build wealth, evaluating these key aspects is essential before deciding.
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The seven most important factors to consider before purchasing a life insurance policy are:
Calculate the Life Cover Amount
Policy Type
Insurer's Claim Settlement Ratio
Additional Riders
Premium Payment Mode
Policy Terms and Conditions
Policy Exclusions
Term Plans
Let's understand these points in detail:
The life cover you need depends on multiple factors such as liabilities, number of dependents, current and future income, assets, and existing life insurance policies. Your life cover should be at least 10 times your annual income. For instance, if you earn ₹10 lakh per year, you should have a minimum life cover of ₹1 crore. To determine the precise coverage amount, you can use a Human Life Value Calculator to make an informed decision.
Life insurance comes in various forms, and choosing the right one depends on your financial goals. Some common types include:
Term Life Insurance: Affordable option that provides high coverage for a fixed period, ensuring financial security for your family.
Whole Life Insurance: Provides coverage up to 99 years, ensuring lifelong protection.
Term Return of Premium Plan: Offers a refund of premiums at the end of the policy term while providing life cover.
No Cost Term Insurance: Allows early exit with a refund of all premiums paid.
Unit Linked Insurance Plan (ULIP): A combination of insurance and investment to build wealth over time.
Endowment Plans: Blend of savings and life coverage, offering maturity benefits.
Child Insurance Plan: Designed to secure a child’s future educational and financial needs.
Retirement/Pension Plan: Helps build a retirement corpus to ensure a steady post-retirement income.
A high claim settlement ratio indicates the insurer's reliability in processing claims efficiently. However, the claim settlement experience is equally important. Many insurers offer claim guarantee conditions to ensure faster and hassle-free claim settlements. For instance, leading insurers with high claim settlement ratios also provide guaranteed claim settlement within a specific time frame if certain conditions are met.
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Riders enhance the coverage of your base policy and provide additional financial security. Some essential riders to consider include:
Accidental Disability Cover: Provides financial assistance in case of disability due to an accident.
Critical Illness Cover: Covers medical expenses for severe illnesses like cancer, heart attack, or stroke.
Waiver of Premium: Ensures the policy remains active even if you are unable to pay premiums due to disability.
Return of Premium Option: Refunds all premiums paid if the policyholder survives the policy term.
Choosing the right premium payment mode is crucial for affordability and convenience. Options include:
Regular Payments: Monthly, quarterly, semi-annual, or annual premium payments.
Limited Pay Option: Pay higher premiums for a shorter period while enjoying coverage for a longer term.
Single Premium: Pay a lump sum for coverage throughout the policy tenure.
Carefully read the terms and conditions before purchasing a policy. Key points to review include:
Grace period for premium payments.
Waiting periods for coverage to start.
Surrender value and policy cancellation charges.
Loan options against the policy.
Beneficiary nomination terms.
Knowing what is not covered under your life insurance policy is just as important as knowing what is included. Common exclusions include:
Death due to adventure sports (e.g., skydiving, bungee jumping).
Death due to terrorism, war, or riots.
Death while driving under the influence of alcohol or drugs.
The benefits of buying life insurance are as follows:
Ensures Family's Financial Security: Provides a safety net for your loved ones in case of an unfortunate demise. You can buy the best term insurance plans from Policybazaar after comparing them to 15+ top Indian insurers.
Covers Critical Illnesses: Helps cover medical expenses during serious health conditions.
Affordable Long-Term Coverage: Offers substantial financial protection at reasonable premiums.
Wealth Creation for Future Goals: Helps in financial planning for your child’s education, home purchase, or business ventures.
Retirement Security: Ensures a steady income post-retirement through pension plans.
Tax Benefits: Avail deductions under Sections 80C and 10(10D) of the Income Tax Act, 1961.
Peace of Mind: Knowing that your family is financially secure in your absence brings peace of mind.
Life insurance is a crucial component of financial planning, ensuring both security and savings. Considering these seven factors, you can select the best policy suited to your needs. Always assess your financial goals, compare policies, and understand the terms before purchasing. A well-chosen life insurance plan protects your loved ones and helps you achieve long-term financial stability.
Note: You should also check the benefits of term life insurance if you plan to purchase the term insurance plan.
Several factors influence the premium of your life insurance policy, including:
Here are the steps to choose the right life insurance policy:
Step 1: Identify Your Needs – Decide why you need insurance (income protection, investment, or savings).
Step 2: Choose the Coverage Amount – Your coverage should be at least 10-15 times your annual income.
Step 3: Select the Type of Insurance – Decide if you need term, whole life, or investment-linked plans.
Step 4: Compare Plans Online – Use platforms like Policybazaar to compare insurers and benefits.
Step 5: Check Premium & Policy Terms – Ensure the premium fits your budget and check the terms carefully.
Step 6: Submit Documents & Medical Tests – Provide KYC documents and complete the medical assessment if required.
Step 7: Pay the Premium & Activate Policy – Once approved, pay the premium and keep track of renewal dates.
˜Top 5 plans based on annualized premium for bookings made on https://www.policybazaar.com in the first 6 months of FY 24-25.
Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
+Rs. 487/month (Rs.16/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 38 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
Policybazaar Insurance Brokers Private Limited | CIN: U74999HR2014PTC053454 | Registered Office - Plot No.119, Sector - 44, Gurgaon, Haryana – 122001 | Registration No. 742, Valid till 09/06/2027, License category- Composite Broker Visitors are hereby informed that their information submitted on the website may be shared with insurers. Product information is authentic and solely based on the information received from the insurers.
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+Rs. 820/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 38 years of age.
+Rs. 1,443/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 38 years of age.
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