Follow These Tips to Buy The Best Life Insurance Policy

In the year 1956, Life insurance sector was nationalized and in the same year Life Insurance Corporation came into existence. Since then, LIC has been making people aware about the importance and benefits of life insurance policy. But the real penetration of Insurance sector started after the entry of private players in the year 2000, due to privatization of the insurance sector. It extended the benefits and widened the reach of life insurance.

With the efforts of government and insurance companies, the number of people insured in India has increased a lot. But still many people don’t have the right life insurance policy. Many people don’t understand the various aspects of life insurance policy and end up buying a policy which gives them no benefit when required.

So through this article, we will look at some of the tips to buy the best life insurance policy.

Tip 1: Analyze your need for life insurance

You must understand your need for insurance. Your clear purpose for buying a life insurance will help you to filter your search in an appropriate manner. Now, life insurance policy isn’t only limited to protection against life, but it can also be used for various other purposes also. You may buy life insurance as a protection against loan or debt, investment option, saving option or as a retirement plan. For serving all these various purposes, there are different life insurance policies like Term Plan, Whole life plan, ULIP plans and you also need to customize your life insurance plan according to your need. So it is better to understand your basic need for buying a life insurance policy, which will help you get maximum benefit from the policy.

Tip 2: Decide the Right amount of Cover

The right amount of cover puts a strong base for making the best life insurance policy for you. A low amount of cover will keep you away from getting the right benefit while a high amount of cover will dig a big hole in your pocket. It is very much necessary to know how much cover you need. A right amount of cover is built upon the basic four pillars, which are, annual income, future obligations, inflation and debts. Keep all these factors in consideration to choose the right coverage amount which will help you to get what you expect from your policy.

Tip 3: Choose a plan as per your Risk Appetite

It is important to buy a life insurance product as per your need and risk appetite. If you want guaranteed returns on your policy, you should go for a traditional life insurance policy. If you have a high risk appetite and ready to take market risks, then you may opt for unit linked life insurance plan.

Tip 4: Compare Different Policies

Any product bought without comparison can make you pay a higher price with less benefit. Same goes with life insurance policy. It is very much necessary to compare life insurance plans of different companies. And with the availability of internet, comparing life insurance policy has become very easy. Insurance web aggregators provide a very easy and unbiased comparison of different life insurance companies. You can also visit websites of different insurance companies and know about the plan at brief.

Tip 5: Go through Fine Print

It is very much necessary to go through the fine print of the policy. There are many circumstances under which you are not covered in a life insurance policy and you must know them. A brochure of the policy contains all the details and is available on the insurer’s website. You must read every point of the brochure and if any questions arise, you must get it cleared as soon as possible. It will help you to understand the exclusion, inclusion, terms and conditions of the policy at brief.