Deciding Life Insurance
Important things to keep in mind while deciding Life Insurance :
- Why ? There is a need of insurance if you are the earning member and have dependents . Your cover should be large enough to protect your family adequately, but not so large that you cannot afford it
- How much ? It is better to be over insured than under insured . Best approach is Human Life Value (HLV) or Ideal Life Cover. This is a number that tells the present value of future income expenses, liabilities and investments. The HLV number is taken usually to understand how much money would be required to secure the lives of your dependents with term insurance, in case you are no longer around.
- When to stop policy? When you think you won’t have any financial dependents , keep your life cover until that age
- Can I change my insurer? There are no provisions that enable you to port a policy but in health insurance , it is possible.
- Why go for term Life cover ? If you want a sizable life cover at affordable rates, even if it means no maturity benefits.
- What you should do? You must fully disclose your lifestyle choices and pre-existing and past medical conditions.(will help during claims)
- From where to buy ? Online covers are cheaper as they eliminate the middle-men.
- What to check in a life insurance company ?
- The claim settlement ratio - % of total claims the insurer has settled.
- The solvency ratio - Reflects the strength of the insurer’s cash flow.
- The reviews of existing customers - Insights into how convenient the user experience is.
- Do you need anything else? Riders are additional benefits to your insurance policy. You can choose them as per your requirement . You can opt for:
- Critical Illness rider if diagnosed with life threatening disease.
- Accidental death cover if the current job calls for too much travel
- Accidental Disability : Partial or permanent
- Waiver of Premium : you don’t need to pay future premiums in case of an accident, death or disability.
