The one unchangeable fact about life is that it's completely unpredictable, which makes insurance not a choice but a necessity. An adequate life cover can spell the difference between a stressful and stress-free financial future for you and your family.
Furthermore, once you enter into a contract with the insurer, you can rest assured that your loved ones will be secure and their needs fulfilled in your absence.
However, no two insurance policies are created equal. Every insurer offers features and benefits that make their products appealing in unique ways. In such situations, how do you pick the best life insurance policy for your specific requirements? This step-by-step checklist will guide you through everything you need to know.
Step 1: Define Your Goals
Just as no two policies are created equal, no two people's financial goals are the same. For example, you might be searching for a plan that offers death benefits, while someone else might be seeking a plan that allows them to earn returns alongside. Therefore, the first step is to assess your goals and expectations from the plan.
Step 2: Calculate Your Cover
Most financial experts recommend that the life cover be at least 10 to 15 times the amount of your annual income, but the actual figure must not simply be estimated. You need to think about factors like debts and the size of your family before making a decision. You'll also need to think about inflation and financial goals like funding your child's education.
Determining the right coverage amount can be complicated, but it's the most important step in the process. Many online life insurance cover calculators can assist you by factoring in all the essential components.
The amount you set will determine the amount of premium you'll need to pay. The lesser your age, the lower the premium.
Step 3: Decide the Term
Life insurance policies are bound by a certain time that can range from 10 to 40 years or even more than that, depending on the type. Permanent life policies provide you with coverage for as long as you are alive. Your plan's term should be determined by factors like your age, health condition, lifestyle, and various others. As a rule of thumb, subtracting your current age from the age at which your income might stop should give you the ideal term.
Step 4: Pick Your Insurer
You want to invest with a company that is both reputable and reliable. The claim settlement ratio (CSR) is one of the indicators of whether the provider can be trusted. Opt for companies that have a CSR of higher than 95% – the higher, the better.
That's not all, though. To pick the best life insurance policy, you should compare as many plans as possible, go through their features, and finally choose one that fits your unique requirements.
There's no doubt that life insurance is an essential tool that protects your family and fulfils your financial obligations after an unfortunate event. These 4 simple steps will help you navigate a complex process and pick the best life insurance policy.