As the earning member of your family, you are not only responsible for supporting them emotionally, but financially as well. This is not only true while you’re alive but also in your absence. Of course, your demise will put your family through an emotional turmoil, but having an insurance plan can save them from the financial burdens that follow.
The plethora of insurance policies available in the market can be a bit overwhelming at times. So, how do you know which policy you should buy? Moreover, what should be the premium that you should pay for your insurance plan?
In this article, you will learn about the answers to all such questions. Here, in this article, we’ve put down a step-by-step process for you to choose the best plan that suits your family needs.
Step 1. Know the Right Time to Make the Purchase
Often people get a life insurance policy either too early or too late. Notably, if you have no dependants on you, it is perhaps too early for you to be investing in life insurance policies. On the other hand, if you are too aged, you are too late for it. Usually, the best time to invest in any life insurance policy is when you have entered your parenthood. This could help you plan your finances better and get the maximum returns on your investment. After all, insurance policies are also a form of investment that you should expect returns on.
Step 2. Learn About the Types of Policies Available
Since there are over a hundred types of insurance policies available in the market, choosing the right one needs some extra efforts. However, these policies can be differentiated into three types primarily, depending upon the type of returns they offer. These include Term Insurance Plans, Insurance With Savings Benefits, and Endowment/Pension Plans. As the name suggests, the first one does not offer any investment benefits and are available for a limited period only, say 30 years. On the other hand, if you seek benefits other than an insurance cover you should choose from the other two types. These offer returns such as interim payments or maturity bonuses after maturity of the policy. However, it is still advised that you should read the offer document carefully before investing.
Step 3. Calculate the Value of Policy You Need
The policy cover requires you to pay a premium to the insurer, either annually or a lump-sum, up-front. Depending upon the type of policy, your age, the number of dependents, your annual income and the term of the policy, the premium you pay will vary. For example, if you opt for a term plan, your premium can be marginal to your income, whereas if you go for an endowment plan, the premium can chop off a chunk from your pocket.
Step 4. Compare the Available Plans
Once you’re aware of all the plans that are available to you, the next step should be to compare them. Of course, you need to make a well-evaluated decision, as it is important for you as well as your family after you. An easy way to compare plans is online resources. For example, you can go through the available choices at SimpleLifeInsure.com, and compare the best plans that meet your budget and needs simultaneously. Online resources can be pretty helpful, even if you haven’t consulted any insurer beforehand. Besides, they also offer a personalized consultation to clear any doubts.
Step 5. Decide How You Wish to Pay Your Premium
When an insurance company offers you a cover, they also offer you a choice to pay your premium in installments or a lump-sum advance. According to experts, choosing to pay in installments is a better option. Especially, for candidates who seek retirement benefits or are looking forward to life insurance for investment purposes. Whereas, for people who seek interim returns on their investment at regular intervals, paying up a lump-sum advance premium is a better choice.
Step 6. Finally, Make the Purchase!
By now, you have all the pieces of your puzzle sorted. You have the right policy that can fit in your budget and also offer the needed cover to your nominees. You have a clear plan for paying the premium and also the benefits that you expect out of your investment. Now, all that’s left to do is making the initial payment and signing a piece of paper that states the terms of your policy and other details, including you nominated as the insured.
In the end, it is still advised that investing in insurance covers is a risky market. It is best to consult with the experts and make the right decision.