When you are hale and hearty, it can be difficult to think about the chance of an unfortunate eventuality occurring to you or your loved ones. However, if you are an earning member of the family and you have dependents, it is necessary for you invest in a life insurance policy. But, purchasing a life insurance policy is easier said than done, especially since most first-time insurance buyers often don’t know how much coverage they should opt for at the time of purchasing their policy. This can lead to one being grossly under-insured or being over-insured, and thereby having to pay a higher premium amount to the insurer. Thus, listed below are a few tips to help you opt for the right coverage amount when purchasing a life insurance plan, more about it, you can find in bankbazaar india
.1. Your current income:
When you decide to purchase an insurance policy, especially in the case of life insurance plans, it is necessary that you take your current income level into account. Most financial advisors recommend that you opt for a life cover that at least amounts to a value equal to 10 times your annual income or even 20 times your annual income if your needs mandate it. In addition to this, you will need to make sure to account for inflation along with your current standard of living to arrive at the right coverage amount. 2. Liabilities and debts:
Your existing liabilities and debts should play a role in helping you decide how much life cover to opt for. In case something happens to you sometime in the future, your family should not have to go through financial hassles as a result of repaying your loans and debts. Thus, if you have a number of liabilities, loans, and debts to pay off, make sure to opt for a life insurance policy with a high sum assured. On the other hand, if you don’t have too many loans or debts, you can opt for a policy with a lower sum assured and save on the premium amount. 3. Future financial goals:
Before you opt for the sum assured or even decide to purchase a certain type of insurance policy, make sure to consider your future financial goals. Different types of life insurance plans have different payout structures. Make sure that the policy you have selected will provide you payouts that will help you plan for certain key milestones in your life, including your children’s education expenses, marriage, a house renovation, etc. Thus, your sum assured should factor-in all the various expenses that you might have to incur in the future.4. Present needs of your family:
Since the primary purpose of a life insurance plan is to provide financial security to your dependents, make sure to consider their needs at the time of purchasing your insurance policy. Thus, the amount of money that it takes to run the household, pay for healthcare-related expenses that are not covered by the health insurance plans of your family members, educational expenses of children in the family, etc. will all need to be accounted for. This is especially important since in the event of the policyholder’s death, the life insurance plan will provide a payout to the nominee to help them meet their immediate needs. Thus, when you opt for a sum assured, make sure that it is sufficient to meet the present needs of your family.5. Age at entry:
When you purchase an insurance plan, your age of entry or the age at which you purchase the insurance policy should be one of the key factors in helping you decide your coverage amount. If you are a relatively young individual, you can opt to purchase a term life insurance plan, since these policies usually offer a high sum assured for a relatively low premium rate to young policy buyers. On the other hand, if you have many dependents and are looking to purchase a policy with frequent payouts, you can opt for a money-back life insurance policy with a suitable sum assured. 6. Keep an account of your investments:
Before you purchase a life insurance plan, make sure to take a note of all your investments and savings. If you have a considerable amount of investments and have saved a sufficient amount of money, you can get away with opting for a low sum assured, thus helping you save on the premium payable. But, on the other hand, if you haven’t made too many investments, it is essential that you purchase a life insurance policy with a high sum assured since your dependents will need the financial security offered by your life insurance plan. 7. Premium payment capacity:
When purchasing a life insurance policy, it is essential that you take your premium payment capacity into account. In addition to household expenses, you might also have certain loans or credit card debts for which you pay monthly EMIs or you might be paying insurance premiums for your car insurance policy or health insurance policy. These expenses may add-up and reduce your disposable income. Thus, make sure to take all your expenses into account and opt for a sum assured with a premium charge that is both convenient to pay and affordable.
A life insurance policy will provide you a much-needed risk cover against death and will help you ensure that your loved ones are taken care of, regardless of the eventuality. Further, before you purchase any insurance plan, ensure that you compare insurance plans online, request for premium quotes, and opt for a policy that will provide you sufficient coverage at a competitive rate. While purchasing a life insurance policy is important, also ensure to secure the other areas of your life by purchasing a health, two-wheeler, or motor insurance policy
for yourself and your loved ones.