You need to plan properly and then buy a life insurance policy. A life insurance policy is a vital requirement these days and you cannot afford to live without it. When buying a life insurance plan, you have to look at several factors, including the cost. However the cost, or the premium, of the plan should not be the only criteria for buying life insurance. Read on to know why.
Premium is vital
The premium is one of the most vital components of a life insurance plan. The entire plan works on the basis of the premium. The premium is the cost you pay for the policy to stay active. It is also the payment you make to the life insurance company to ensure you get the payouts as and when required. Therefore the volume of the premium is directly proportional to the cover that you get. A plan with a higher premium will have a higher cover and vice-versa. The premium thus is important. But it is not the only factor to consider.
Claim settlement ratio
The claim settlement ratio of an insurance provider is another important factor to consider when buying a life insurance plan. You must look to buy the plan from an insurer who has a healthy claim settlement ratio. If you opt to go with an insurer who offers the price at a low premium, but has a poor claim settlement ratio, you may end up with a rejected claim later on. So don't be penny wise and pound foolish – take this very important factor into account as well.
In India, the claim settlement ration of all insurers can be found on The Insurance Regulatory and Development Authority of India website.
The next important factor to consider is the insurance provider's customer service system. The insurer you choose must have an excellent customer support cell. Many life insurance plans are bought online these days, without the involvement of a broker. So your insurer must be available at all times to help sort out any issue that may crop up in the plan. The after-sales service of your insurer must be top notch at all costs.
Availability of riders
Next, you have to see what riders are available with your life insurance plan. Riders are add-on covers that you get at an extra cost. The riders help you customise your plan and make it more suitable for you. Taking a rider may increase the cost of your plan, but it is important to do so. So rather than just focussing on the premium, take the availability of the riders into consideration too. The common life insurance riders include the critical illness rider, the accidental death benefit rider and the waiver of premium rider, among others.
Offers and terms
Different life insurance providers have different offers as well as terms and conditions. While one insurance company may categorise you as a non-smoker if you haven't smoked in three years, the other may only do so after you stop smoking for five years. So run an online comparison and see what offers and clauses the various insurance providers have. Choose an insurer that offers the most practical terms and conditions that are well suited for you.
The bottom line
There are indeed many factors to consider when buying a life insurance plan. As we saw, the premium is an extremely important factor, but it is not the only factor. So keep the points mentioned above in mind and shop around before you buy a life insurance plan. There are many options available from many insurance providers. Compare the options and then buy a life insurance policy that is affordable, practical and tailor made for your requirements.