Buying Life Insurance Plan in India Checklist Guide
Life insurance is a contract between the policyholder and insurance company, wherein the insurance company promises to pay a sum amount in case of death of the insured in exchange for a certain premium amount which needs to be paid for a specific tenure. It provides financial protection to the family in times of need.
Life insurance could be purchased through online or offline mode. Let us scratch the token and see what’s exactly in Life Insurance and let us also check the guidance before buying a life insurance plan in India.
There are many types of Life Insurance plans available in India:
- Term Life Plan:
This plan offers sum assured to individuals in case of demise of the insured during the policy term. But if policy tenure completes and nothing happens to the insured, then the amount is not paid back.
- Whole Life Plan:
This plan offers insurance for a lifetime which is covered to 100 years of age. If outlived the term, then maturity benefit will be received. The premiums are usually high in these plans.
- Endowment Plan:
In this plan, one can get life insurance along with certain maturity amount. If one dies during the tenure, the sum assured is given to the nominee. Once maturity is reached a certain amount along with bonus is received.
ULIP generally provides higher returns as compared to other plans as this amount is invested in equity markets.
- Children Plan:
Children’s plans are usually for long period financial goals. It can generally be used for a child’s education or marriage. It works similar to ULIP plans.
- Retirement Plan:
These plans are given to the nominee in the form of pension after a particular duration of time depending upon the plan.
- Check for suitable insurance plans as per your requirement:
If you are the sole breadwinner, then term insurance is better, which will fulfil all financial needs of family members in case of your untimely death. Or if you are one of the breadwinners in your family, then you must select a ULIP plan. ULIP can fulfil your financial needs, like child education, child marriage, retirement, etc. You must also check for all your liabilities like a car loan, home loan, etc.
- How much amount of life insurance cover should you take?
Calculating the amount required for the sum assured is simple. Just calculate total expenses along with car loan, home loan, etc. If you have other breadwinners, then you can minus the amount. Now that much amount of sum assured you would need for your family member to be financially stable.
- Types of riders available with term plans:
Check for types of riders available along with term insurance. Riders provide additional accidental benefits; those with life risk jobs should purchase this plan. There are also riders available in which all your premiums are waived off. But you to opt for a waiver of premium rider. Again, riders are available which pays a percentage of sum assured during treatment, and the remaining sum assured is provided after the death of the insured.
- Searching the best insurance companies in India:
While searching for best insurance in India, ensure that it provides a better claim settlement ratio. Also, ensure that all your needs are satisfied through this plan. Check for customer satisfaction and services as well.
- 6 caveats to consider:
- Sign a Married Women’s Property Act addendum so that for a married man, no one except his wife can claim the policy amount
- Ensure that beneficiary and nominee details are correct
- Make sure all the facts are true. False information could also deny your claim.
- Undergo a medical test
- Understand the policy terms properly
- There is always a freelook period usually of 15 days from the date of receipt of policy in which one can return policy if not sold which was promised.
Life is very crucial. Be careful before purchasing life insurance, as this could affect your family members as well.