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Here's How to Choose The Right Life Insurance

Life insurance acts as a risk cover for you and your loved ones. Here is an analysis so that you can choose the right life insurance as it is very important decision.

  • 4,591 Views | Updated on: Mar 14, 2024

Life insurance acts as a risk cover for you and your loved ones in multiple situations such as retirement, death, security against home loans, etc. However, thorough research and knowledge can make the most of your chosen plan. Let us look at a few steps to help you select the best life insurance policy in India.

When you try to comprehend what a life insurance policy means, you will see that an agreement between you and your insurer is binding for a significant period. In this, the insurer gives your loved ones a pre-decided sum assured in the case of an unfortunate demise; it may be given to you at the time of the insurance maturity.

Benefits of Life Insurance

There are multiple benefits of buying life insurance:

  • Financial security in an unexpected turn of events
  • Home loan payment by tying it with a life insurance policy
  • Children’s Education
  • Daily expenditures
  • Tax deductions on premium payment

Types of Life Insurance Products

There are different types of life insurance products, such as term insurance, whole life cover, retirement plans etc., to which you can add benefits known as insurance riders. Some of the most common riders are listed below:

  • Critical illness rider
  • Accidental benefit rider
  • Income benefit rider
  • Premium waiver rider
  • Total permanent disability rider

How Do You Choose the Best One?

  • Assess Your Needs
  • This implies understanding what you are looking for and who you want to secure. For example, if you are looking at your family’s financial safety, you may go for the right term insurance plan, but if you are looking out for yourself post-retirement, you can opt for a retirement plan. Buy one which aligns with your requirements.

  • Calculate Your Cover
  • This will be done keeping in mind the daily expenses of your household, loans, if any, the education of your children, the rising inflation, etc. You can choose the best coverage that fits your needs based on all this information.

  • Compare Policies on Different Insurance Websites
  • This will help you understand the best life insurance policy for adults to make an informed decision. Also, it is recommended to buy a policy online as you can directly purchase from the insurer and enjoy a hassle-free and convenient experience.

  • Determining The Premium
  • One of the vital insurance policy details we look at is the premium, and one must thus know how or why it varies. The premium will depend on a few factors, such as your age, lifestyle habits, the riders you choose, and, more importantly, the policy you choose (e.g., the right term insurance plan usually has lower premiums).

5 Things to Consider when Choosing the Right Type of Life Insurance

choosing right life insurance plan

  • age
  • Your age is one of the key factors in deciding which life insurance product you select—and even what options are available to you. You’ll generally have more options to choose from as you get younger. Your ability to obtain some types of life insurance, such as basic term life insurance, expires at age 60.

  • Gender
  • Additionally, women typically live seven years longer than men do, which results in cheaper coverage for them. The difference in life expectancy, though, is beginning to narrow. Your life insurance premium will be priced primarily using your age and gender.

  • State of Your Health
  • Almost all life insurance policies demand a medical history questionnaire or a physical examination to determine your health. It almost goes without saying that your insurance policy will be less expensive the healthier you are as a person.

    Smoking has a significant impact on life insurance premiums. Your price will be much higher if you list nicotine.

    Remember that life insurance companies frequently link your age and health. As a result, it is assumed that you will be healthier as you age and vice versa.

  • Budget
  • In general, term life insurance is less expensive than permanent life insurance; this is because the policy is only in force for a predetermined amount of time, and there is no financial value being accrued inside the policy.

    With a term insurance policy, you decide how long your life is covered (often 10, 20, or 30 years). When that period expires, a new rate is calculated, and it will go up greatly if you wish to keep that specific coverage (which is typical because your health has significantly deteriorated). With a perpetual insurance policy, the coverage is in effect for the rest of your life, and the payment stays constant.

    Consider term life insurance if you’re very concerned about your budget. Term life insurance, sometimes known as “beginning life insurance,” enables you to purchase a practical plan within your price range. Term life insurance is a fine place to start, but if you conducted a needs analysis with a qualified agent, it might suggest that you should have additional coverage.

  • Duration of Need

Are you interested in a policy that only offers you protection for a limited time? For instance, you might want to get life insurance if you recently bought a house with a 30-year mortgage. A 30-year term insurance coverage can be the greatest option for you if making sure that your mortgage balance is paid off after your passing is one of your top priorities.

A permanent life insurance policy is more appropriate for your needs if your main worry has protection in place even 45 years from now.

After deciding to invest in a policy or buy a policy online, you need to consider several things and weigh the pros and cons before making a decision. Keeping a note of the points mentioned above, you will be one step closer to buying the best-suited policy for you and your loved ones!

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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