Questions to Ask Before Buying Life Insurance

How much life insurance coverage do I need?

This is the most fundamental question for every interested life insurance buyer. Simply put, the size of the life cover that you choose should be adequate for your family's financial needs. This amount may vary from one person to another. Someone who has only one dependent family member may need lower coverage than someone with multiple dependent family members.

To identify the right amount of life insurance coverage for your needs and your family's, the sum assured under the life insurance plan should account for the following:

• Your family's everyday expenses
• Their major emergency expenses
• Any debts or liabilities in your name
• The cost of the major life goals and milestones
• Inflation and the rising costs of living it brings

What policy term would be ideal for me?

There are life insurance policies that offer coverage for around 20 years or so, and there are plans that cover you for the whole of your life, up to the age of 99 or 100. So, what is the ideal policy term for you?

Experts generally recommend that your life insurance plan should cover you till you attain your retirement age, at the very least. This is because in case something untoward happens before you retire, your family will have the financial protection of the life insurance plan to rely on. So, the policy term will depend on your age at the time of purchase. The table below explains this better.

However, this is just one option. You can also choose a life insurance plan that offers longer coverage, perhaps till the age of 80 or 85, or even whole life coverage, which goes up to the age of 99 or 100. This would be better suited for you if you do not have a lot of other investments to rely on, or if you want to provide your family additional protection. Do keep in mind that longer coverage also comes with a higher premium.

What kind of life insurance plan should I choose?

Well, that depends on your specific needs and requirements. But here's a quick capsule guide to help you decide.

How to choose the right life insurance service provider?

Just like it is important to choose the right kind of life insurance plan, it is also important to choose a reliable insurer. Before you zero in on a plan, ensure that the life insurance company you choose has a high claim settlement ratio (CSR).

This is simply the ratio of the claims the company receives to the claims it settles. A higher CSR indicates better chances of your insurance claim or your family's claim being settled - as the case may be. In addition to this, you also need to look at the following factors:

• The insurer's financial strength
• Their customer service and support
• The reviews of their existing customers
• The solvency ratio of the insurer

What are the premium payment term options available for the plan?

This is another important question to ask before you make your purchase. Essentially, there are two kinds of premium payment terms to choose from.

• Regular premium payment:
  

  Here, you pay your premiums over the entire policy term. So, if you opt for a policy that gives you a life cover for 30 years, you have to pay premiums for all those 30 years.

• Limited premium payment:
  

  Here, the premium payment term is shorter than the policy term. For example, if you opt for a policy that gives you a life cover for 30 years, you may have to pay premiums for a period less than 30 years. This period varies from one plan to another.

  In the case of regular premium payment terms, the premium instalment is lower than it is in limited premium payment terms. So, you can make your choice based on your financial condition.

Do I need an add-on rider?

Add-on riders help enhance the protection offered by your life insurance plan. There are different life insurance riders that you can choose from. Not all policies offer riders though. So, check if the plan you are looking at gives you any add-on rider choices. For example, the ABSLI Vision LifeIncome Plus Plan allows you to choose from 5 different riders.

If you wish to extend the coverage offered by your plan to specific, need-based incidents like a critical illness diagnosis, accidental death or disability, or a surgery, you can choose to purchase a rider as well. In exchange for this, a small additional premium is added to the cost of your base plan.

Does my life insurance plan have a 'waiting period'?

When you purchase a life insurance policy, either a part of the coverage or all of it may not come into effect immediately. In some cases, you need to wait for a brief period of time, like 30 days or 90 days, for the coverage benefits to come into effect. This is what we call the waiting period.

In the ABSLI DigiShield Plan, for instance, the Accelerated Critical Illness (ACI) Benefit has a waiting period of 90 days.

So, before you buy a life insurance plan, check out the waiting period it has, if any.

What happens if I forget to make a premium payment?

This is something every life insurance policyholder worries about at some point. So, it's best to get this query clarified right at the start. If you forget to make a premium payment when it is due, your policy does not immediately lapse. Life insurance service providers give you a grace period - generally 30 days or so.

During this period, you can still make the premium payment along with a nominal penalty for the delay. However, if you fail to pay the premium even during the grace period, the policy lapses, and you lose the coverage and all the other benefits that it offered you.

Bottom line - it pays to pay your premium on time.