May 30, 2014,12.56 IST
Things to remember before buying an insurance policy
Buying a life insurance policy should be a well-thought financial goal and must not be based on ad-hoc assessment or advice. More often than not, people buying insurance policies avoid getting into the details and then find themselves in a quandary.
The key to buying an insurance policy is understanding and evaluating the financial needs of your family. An insurance policy is a useful tool that not only guarantees a financially secured future for you and your family, but also makes for a wise investment that yields tax benefits. Here are certain things that all prospective buyers of insurance must remember:
Calculate the amount of insurance needed
Arriving at a cover that is adequate and sufficient is a task that is easier said than done. To arrive at a sum, one needs to assess properly the current needs and requirements and then project them into the future. For instance, if you have small kids, after say ten years they will be in college, after 15, they will need specialized education and so on. Thus, one must jot down all the possible requirements like EMIs, household expenses, health-related costs, inflation and then arrive at a cover. It is also advisable to involve the nominee into such deliberation. Know our right insurance amount, Click Here.
Type of product requirement
It’s not always easy to choose a particular type of insurance policy. If you want security from your medical bills, a mediclaim policy can help you in covering your expenses. Similarly, a life insurance policy offers financial security to the family in case of death of the insurer. A pension policy provides you with a reliable income support after retirement. This way, there are a number of policies in the market. You should choose the one that fits your requirements. Click Here, to know the various life insurance product types.
Choose policy keeping premium in mind
Paying premium amount religiously helps you in reaping the benefits of your policy. Depending on the policy cover and age of the proposer, the insurance company will decide on a premium amount. Premiums can be paid on an annual, half-yearly, quarterly or even a monthly basis.
Always choose a policy whose premium amount is well within your paying capacity. It is very important to pay premiums on time, otherwise the policy can lapse.
Select policy term wisely
Policy term decides the amount of time during which you will be eligible for cover under a specific policy. In other words, it defines the expiry date of your current policy. You must select the term of the policy wisely because once the term is over, you cannot avail of the benefits offered by the policy.
Number of policies you wish to buy
There is no thumb rule on the number of policies you can buy. It is subject to your requirements. You can either buy one policy or split your purchase by buying more than one.
Principal Financial Planner
Optima Money Managers