6 Key Aspects to Keep in Mind While Choosing the Best Life Insurance Plans


Choosing the best life insurance plan is an inevitable requirement for every individual who has a family to look after.  Life insurance is the simplest and the best way to secure your family financially against any type of uncertainties of life. In any financial portfolio having an insurance policy is a must as it minimizes the risk related to loss of property or life.

However, it often becomes confusing for insurance seekers to choose the right insurance policy as there is a wide range of life insurance policies available in the market. Before zeroing in on a plan it is important to compare various plans online and consider various aspects of it.

In order to help you get the best life insurance plans, we have briefly discussed the key aspects that should be kept in mind while choosing the best life insurance plans.

1. Determine the Amount of Coverage You Need-

One of the most important steps of purchasing a life insurance policy is to calculate the required amount of coverage. The rule of thumb is that the insured should avoid making the mistake of under insuring themselves. Thus, as an insurance buyer, you should buy an insurance coverage of about 8-10 times of your annual income.

While choosing the insurance plan, it is important to know that how much coverage you will require to take care of various needs like paying off debt/loans, expenses incurred due to pre-existing medical conditions, education fund, and individual’s dependent on your income for survival and other liabilities.

Besides this, it is also important to consider the other factors like age factor, annual income before taxes and number of dependents while zeroing in on a plan. The basic thing to keep in mind is that the life insurance you choose should be sufficient to cover all the possible expenses of your family in case of your demise so that they can continue to have a good lifestyle even in your absence.

2. Assess you Requirement and Budget-

While assessing the available options, it is important to consider that the amount of sum assured chosen by you will be able to fulfill the future requirements of your family or not.  It is important to keep in mind the inflation rate while evaluating your needs, as your current spending might not be sufficient to support your family needs tomorrow. As there is an array of insurance policies available in the market today, depending on your future needs and income you can choose the best life insurance plans.

Moreover, in order to avail the precise result, you can also compare the quotes online and choose the plan as per your requirements. Settling upon the tenure of the policy will also help you to take a better decision of choosing the best plan.

3. Premium Amount-

Knowing the amount of coverage you require is just one side of the coin. It is equally important to know that how much coverage you can afford and the capability to pay those premiums. The best way to calculate the premium amount is by using life insurance premium calculator.  With the help of a premium calculator, you can determine the amount of premium you will be required to pay. Moreover, you can also compare the plans online and choose the best life insurance plans.

4. Look for the Cheapest Quotes Available-

Every life insurance companies offer different rates of the policies. In fact, these rates can vary greatly even for the same type of policy cover. So, before making a purchase, don’t forget to research and check for the cheapest quotes available for the type of plan you have chosen. Compare the various quotes of policy and then make a decision of purchasing the plan.

5. Choose the Right Insurer-

Another key factor that should be considered while purchasing a plan is choosing the right insurance company based on:

  1. Claim Settlement Ratio– It is the ratio between the numbers of claim filed by the insured and the number of claims settled by the insurance company. 50% of claim settlement ratio means that the insured for 50 claims out of 100 claims filed. While purchasing a life insurance policy the insurance buyer should always choose the insurers with higher claim settlement ratio.
  2. Solvency Ratio– If is defined as the insurance company’s ability to take care of the insured debt. You can only get assured returns from the insurer which has a strong capability to fulfill your short and long-term

6. Finally, Understand your Policy-

Once you decide which plan to purchase, make sure that you understand the policy thoroughly. Moreover, go through the policy documents carefully and clear all your queries with the insurer, so that you do not become the victim of policy miss-selling. Here are few queries that you should clear with the insurer.

  1. What are the inclusion and exclusion of the policy?
  2. What are the factors that determine the premium rates of the policy?
  3. When the policy can be canceled and is there any cancellation charges included?
  4. Can you change the nominee of the policy?
  5. In the policy is renewable or convertible?
  6. Insurer rating, if any.

These are some of the important factors that should be considered while choosing the best life insurance plans. Remember to do a proper homework, identify the purpose of buying a life insurance plan and choose the best life insurance plans according to your suitability and affordability.

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