How to Find the Most Suitable Life Insurance Plan?

Life insurance is a legal contract between policyholders and the insurance company. In exchange for single or regular premiums, payment or cover is guaranteed to the beneficiary when the insured dies. This is known as a death benefit. The amount may also be offered after a specific term if completed. This lets you fulfil long-term needs like marriage, education or a home purchase. No wonder the life insurance industry in India is expected to increase at a CAGR of 5.3% between 2019 and 2023 with penetration pegged at 3.2%.
In February 2021, the Finance Ministry announced to infuse $413.13 million into state-owned general insurance companies to improve the overall financial health of companies. While the government is working towards the upliftment of this public sector, you must also consider a few personal steps to pick the right plan and maximise benefits. Here’s a look.

Insurance Premium  

Pick a policy that has low-cost premiums to fit your budget well.  But make sure to check the total life insurance it provides. An ideal instalment should be the one that covers all your needs without being too costly. Know that the premiums are lowest when starting early since you are healthy with lower chances of claims payout. Use online premium calculators to know the accurate amount you have to pay to get a particular policy. 

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The Policy Term 

The tenure must be the number of years your family may be dependent on you. But one can always pick a long-term investment rather than a short-term policy for a better financial cushion. It offers a higher sum assured in exchange for affordable premiums. Subtract your present age with the age at which your income might stop. This can help you arrive at the right policy term for yourself and family members. 

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The Right Insurance Cover

Financial experts say that life insurance must be 10-15 times your annual income. Try to consider elements like the family’s annual expenses multiplied by the number of years for which income replacement may be needed, the amount you need to set aside for future expenses like a wedding or buying a car and the total outstanding debt liabilities. Now minus the liquid assets like cash or savings to pick a perfect life insurance policy. 

Claim Process 

Pick a company with the highest claim settlement ratio. This is the percentage of claims that a provider settles in a year out of the total applications made. Further, make sure all the claims are processed quickly and seamlessly. The insurer must offer help in submitting the papers as well in case of eventualities. The top insurance company often sends the policy claim much before the maturity date to avoid last-minute rush.  This way you can also expect guaranteed benefits to the policy beneficiary without delays. 

Keeping these tips in mind can help you pick suitable life insurance plans. Do not forget to analyse the exclusions and inclusions. Check your needs well, create a budget and consult a financial expert if needed for optimal results. 

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