Jasmine Birtles
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How to Choose the Best Life Insurance Policy in 2024: 5 Features to Look For
Moneymagpie Team
8th Apr 2024
A Life Insurance Policy is a critical financial decision that aims to secure the future of your family and loved ones. Different types of life insurance plans are available, each with its own benefits, features, and shortcomings. Buying life insurance is similar to buying any other object. Suppose you want to buy a television. What do you do? You assess your budget and needs and then compare all the available options. You evaluate the features that offer the best value for money.
It is the same for life insurance. You have to check for features and then make a decision. This process can be tedious, given the number of options available. This article aims to do the same by providing you with the five most important features to look for.
7 Types of Life Insurance Plans
There are seven main types of life insurance plans available in India. These are:
- Whole Life Insurance Plans
- Term Insurance Plans
- Child Insurance Plans
- Term Plan with Return of Premium (TROP)
- Unit-linked Insurance Plans (ULIPs)
- Endowment Insurance Plans
- Pension Plans/ Retirement Plans
The features and benefits of each vary in terms of policy tenure, premium amount, cost, cash value component, tax benefits, etc. Thus, it is also important to acquire a basic understanding of each type before making a purchase.
Five Key Features to Consider
The first step when buying a life insurance plan is to clearly understand how much your family and child will require if you hope to give them proper financial safety. Consider your family’s future financial objectives, home necessities, and other financial requirements. Each type of Life insurance will have several options from different insurance companies that cater to these needs. To make the best choice, assess the plans against the following features.
Coverage Amount
Assess the coverage amount offered. Because the coverage amount is what your family will get if you pass away, you should carefully consider your options. You can use a variety of online life insurance calculators to get the appropriate coverage. All you have to do is enter your age, occupation, salary, and other basic information.
Policy Duration
The term policy tenure describes the period the insurance will offer coverage. Your age, financial objectives, and the length of time your family will depend on your income are all important considerations when determining the optimal term for your insurance.
Claim Settlement Record
Always review the claim settlement record of the insurance company. This is, in essence, how the coverage is provided to the beneficiary. It’s difficult enough for your family to lose the primary earner, but it nearly negates the whole point of life insurance if they have to fight for the only source of income they will have. The percentage of claims the insurance company settles each year relative to the total number of claims received is known as the claim settlement ratio. It functions as an indicator of the company’s reliability.
Additional Features
Consider the added benefits and riders offered by the insurance plan. These can include:
- Accidental Disability Rider
- Critical Illness Rider
- Waiver of Premium Option
- Child Support Benefit
Also, check if the insurance plan offers the benefit of cash value growth.
Policy exclusions
Examine the exclusions from a life insurance policy. For instance, death from adventure sports is not covered by life insurance. Likewise, rioting and even fatalities resulting from drunk or drugged driving are not included in the broad range.
Conclusions
Buying insurance that aligns with your family’s needs is essential to secure your family’s future. The right plan will offer you appropriate coverage and peace of mind without going heavy on your budget. Compare the different options available in the market and consider the five features highlights to make the best choice.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.
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