Our lives are uncertain but we do not want to leave our loved ones in uncertainty, do we? Buying life insurance is one of the major steps towards protecting our loved ones from uncertainty and financial crisis. To find the right life insurance, you need to compare insurance policies and then choose the one that suits your requirement the best. Here are eight tips to compare term policy and traditional life insurance policies and then choose the one that works for you the best.
Table Of Contents
1. Age is a great factor while buying life insurance:
The younger you are, the lower premium you would need to pay for life insurance. Thus, it is always better to buy life insurance when you are in your 20s or 30s. This doesn’t mean that you cannot buy in your 40s or later, but the premium will increase proportionately to your age.
Note: Once you buy a life insurance policy, your premium doesn’t increase. It remains fixed forever!
2. Choose the type of insurance you need:
There are different types of insurance plans from term insurance, whole life insurance plans, endowment plans and money-back plans. Term insurance plans are pure protection plans for a specific tenure while whole life plans are for the entire life of the insured. Endowment plans have a maturity benefit along with death benefit with an element of savings while money back plans have a predefined schedule of survival benefits being paid out to the policyholder. So, you need to opt for a plan which you think is best for you and your family.
Note: Term insurance plans are the easiest and the cheapest way to have high coverage at least cost!
Analyse how much coverage your loved ones will require. It can be calculated based on your living standard and monthly expenses and future financial goals.
4. Family income:
The annual income or the family income needs to be considered wisely. It is because the premiums are required to be paid on time. You need to evaluate how much premium you can pay without affecting your present living style.
While calculating premiums, you cannot only consider the income, you need to assess your liabilities as well. If you already have some EMIs on loans, or other insurance premiums, or market debt, you need to consider them and step up your coverage amount.
6. Financial goals:
The coverage should be measured after analyzing your financial goals. It can include retirement, child education, buying a house, etc.
7. Additional Riders:
When you want to compare insurance policy, also consider the additional riders you can add and at what cost. These riders help to enhance your coverage but at an additional premium.
8. Compare benefits and not just cost:
When you choose a life insurance plan for your family, you need to choose benefits and not just cost. Thus, you cannot compare term policy with traditional life insurance policy as the benefits are not the same!
So, if you follow these aspects, it would be easier to choose the best life insurance plan for you and your family such that it comes handy when you most need it. The trick is to opt for the highest coverage that you can afford and as soon as possible.