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Are you buying life insurance for the first time? Do you know what factors you should consider? This piece of writing will help you.
Before zeroing-in on a life insurance policy, you need to consider the following points.
Key out your needs:
Before buying an insurance policy, it is important to key out/identify your needs. Insurance requirements differ at every stage of life. If you are newly married, then you have dependents, your policy should center on the financial aid that would help your wife/children in your absence. Children’s education, marriage, your retirement, etc. all of these needs are taken care of by the policy. Evaluate you needs and then make a choice of the insurance policy.
How much insurance is needed?
After having identified the need to buy insurance, the next step is to determine the actual amount of cover needed. If you are young and dynamic, you fall in the high-earning age group. Hence you can afford to take risks. However, as you grow with age, you fall more close to the retiring age. At this stage you can take minimum risks. So make your decisions carefully.
To quantify your insurance needs, you can approach your insurance agent. He/she will help you arrive at a plan that fit aptly to your needs.
Misconceptions:
Many individuals look at life insurance policies as a tax saving instrument. This is one of the grave mistakes that many people make. Insurance is the armour to save you from future financial troubles. So it cannot be misunderstood as a ‘tax saving instrument’. It gives you the much-needed financial protection.
Coming back to making a choice of the policy- if you were to buy term plan, it would just provide you a pure risk cover unlike saving plans (endowment, term, money back plans) that provide maturity amount at the end of the term of the plan. The premium amount becomes higher with the saving-plans because along with the insurance protection, it offers you the maturity/survival amount.
If you are still confused, your insurance agent will help you in making the right decisions for you.
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