Things to know while comparing life insurance plans in India

Posted by Jenny Dsouza on February 25th, 2017

Life insurance plans have evolved with time. Each day companies introduce innovative policies in the markets with varied benefits and features. You’re no longer restricted to plain insurance cover. Life insurance plans such as term plans, whole life insurance plans, money back plans, endowment plans, ULIPs, etc. are being catered to the customers by insurance companies. From plain life cover to investment tools everything could be customized and combined to form an integral policy that will have you and your family take care of your finances in present and future scenarios.

But often due to the vast expansion of the segment and so many companies offering hundreds of policies, customer are confused as which is the best cover plan for them.

Here are a few tips to consider while choosing your life insurance plan:

Firstly, let's understand why you need life insurance plans? Any individual who has dependents on them need to have a suitable life insurance cover that will help the family be financial secured in case of an unfortunate event. A life insurance plan can provide financial support for the family you will leave behind in case of your demise.

The key to buying the right insurance cover is to understand your financial position and what kind of coverage you will need. List your requirements and priorities in advance. Develop a clear picture of your current asset and liabilities. Check out your family’s financial needs and then go for a suitable purchase from a host of life insurance plans.

Also, assess the total lifestyle expenses of your family, such as education, marriage, daily survival needs, existing debt that has to be cleared in your absence, etc. Ideally, the insurance premiums are based on factors such as age, gender, tenure and any habits such as smoking/drinking. 

Your Current Age: The age at which you take your policy is an important factor. The younger you are, the lower will be your premiums. Premiums increase with age, as does insurer’s risk level.  Therefore, early buying is the key for lower amount of premium.

Gender: Since researchers say women on an average live longer than men, the insurance premium for their policy is slightly lower.

Habits: Consuming cigarettes, tobacco or alcohol will shoot up your premium costs as the risk level associated with these is high. But one should be honest  to the insurance company about such consumption habits,  as if  found later, it will lead to termination of policy or shorter cover.

Tenure: The longer the insurers  cover you, the greater is the risk undertaken by them. Thus, in the long-run, the premiums paid will be low but the costs incurred will be more, whilein short-term policies premiums will be higher but expenses incurred by you will be less.

Life insurance plans come in different sizes and boast about different features, prices, and terms. If you need an insurance, make sure you understand how to make the right choice, because you don’t want to end up paying more or be stuck with inadequate cover. Choose a life insurance plan that is more likely to fulfill all the financial needs of your loved ones and enable them to lead their current lifestyle even in your absence.