How do I buy Life Insurance?

Life insurance is a vital investment option that allows you to secure the financial future of your loved ones in your absence. An essential part of financial planning, life insurance policies offer several benefits, like helping you achieve your long-term goals and ensuring that your family does not have to bear the burden of paying off your liabilities. A life insurance policy can be bought online from the insurance company’s website, through an online agency, or offline through an authorised agent of an insurance provider.

Here, we talk about buying life insurance and the considerations associated with it.

Considerations in Buying Life Insurance

Life insurance is highly recommended for people who wish to ensure that their families have adequate financial resources, even in their absence.

Type of Life Insurance Policy to Buy– Several options, like term life insurance or life insurance, with additional rides like accident benefits, disability benefits, and critical illness covers, are available. A decision on the type of life insurance required is important.

Here’s what you should consider to make the decision.

Choosing the Insurance Company- Several insurance companies offer a variety of life insurance policies with different features and riders. Investors need to check the claim settlement ratio of these companies and customer reviews about the kind of service offered by them before finalising the insurance company from which they wish to buy a policy.

Policy Amount-The next decision is about the quantum of the life insurance policy required. This will depend on a person’s current income and expenses, the number and extent of liabilities, and the level of inflation. All these factors need to be taken into consideration for deciding the amount of life insurance required to ensure the financial stability of the family. Experts recommend buying a policy of about 10 times a person’s current income to secure the financial future of the family and loved ones.

Link it to Financial Goals– In case a person wishes to buy a life insurance policy to build a corpus of funds that can be used to fulfil a specific goal like funding a child’s education or marriage or retirement expenses, the duration of the policy will depend on the timing of these goals.

Premium Amount– Another consideration while buying life insurance is the premium that will need to be paid in a year. The premium amount should be decided, based on the applicant’s ability to set aside that amount every year without default. The policy amount and the duration of the policy will also help to arrive at the right premium amount. You can always use a life insurance premium calculator to arrive at the premium amount that you will need to pay for a specific maturity amount after a specific number of years.

Buying Life Insurance

A life insurance policy can either be bought through online agencies or offline from the registered agents of various insurance companies. The online mode of buying policies is gaining popularity because it is convenient, can be done from anywhere at any time of the day, and is more transparent and accurate. Online purchase also allows a person to compare different policies at the same time and choose the one that matches the requirements. One major advantage of the online mode is that the premium charges are lower because of the absence of any intermediary and brokerage fees.

Investors also have the option of buying a policy through an agent who not only explains what is life insurance but also explains the associated terms and conditions along with the benefits of a policy. The agent will help in choosing the right amount and duration to match the applicant’s requirements, besides helping in the whole process of filling the forms and submitting the essential documents. A major benefit of going through this route for buying a policy is the continued support provided by the agents, whether for buying the policy or paying the premiums on time or filing claims and resolving any kind of doubts.

The process of buying a life insurance policy involves filling a form, besides providing the necessary documents for proof of age and other personal details. In the case of certain policies, applicants above a specific age have to undergo a medical test or provide certificates from medical authorities about their health status. The insurance company validates the information submitted by the applicant before approving the policy.

Once the policy is issued, the policyholder should go through it thoroughly, and in case of any doubt, should contact the agent or the company for its resolution. All life insurance policies in India come with a free-look period, within which the policyholder can return the policy if the terms and conditions are not acceptable.