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.