3 factors to consider before buying an insurance policy
A life insurance policy is one of the most important investments a person can make in their lifetime. It is one of the few investments with a guaranteed amount to protect the financial future of one’s family in the event of the death of the policyholder. While all other types of investments can take between a few days and a few weeks to liquidate; life insurance policies take effect much faster and as a result the amount is paid out to his family sometimes in as little as 24 hours depending on the service provider.
What is a life insurance policy?
The best life insurance policy is an investment instrument that guarantees an insured sum in the event of the premature death of the insured to his family. By paying regular premiums throughout the contract, a person can also take advantage of the savings/maturity component that some plans offer to build up a solid body of stock once the contract has expired. Additionally, there are many other benefits that one can get on these policies including Critical Illness Coverage, Accidental Death Benefit, Accidental Disability Benefit, Accelerated Death Benefit, pension payments, etc., depending on the type of policy.
Now that we have discussed life insurance in general. let’s look at some types of insurance policies that you can choose!
● Term life insurance: A term life insurance policy is a pure life insurance policy that has no savings or maturity component and only guarantees an insured sum to the policyholder. This sum is paid as a death benefit to the candidate(s) in the event that the policyholder dies while the policy is in force.
● Term insurance with refund of premium: This type of policy is an extension of the term insurance; the only difference being that if the policyholder were to survive the term of the policy, he is entitled to receive the premiums he had paid to keep the policy in force.
● Insurance plan linked to a unit: This is a market-linked insurance policy that can give you better returns by investing a percentage of your premium in market-linked plans such as loan and equity funds.
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● Staffing policy: This insurance contract is a life cover with a savings and maturity component. By making regular premium payments, the policyholder is entitled to a lump sum at maturity, making it an excellent investment plan to build a retirement corpus. In the event that the policyholder dies before the maturity period is reached, the sum insured as well as the accumulated premiums are paid to the members of the policyholder’s family.
● Whole life insurance: This policy remains in effect as long as the policyholder is alive, or until age 100. In the event that the policyholder exceeds the age of 100, he is eligible to receive a maturity benefit under this policy.
● Pension plans: These life insurance policies help you prepare for retirement by helping you build a strong post-retirement body. You also have the option of receiving a lump sum, regular payments or a combination of these once the policy has matured.
Things to consider before buying insurance
If you are considering getting the best life insurance, there are certain criteria that both the insurance service provider and the policy must meet in order to be considered. Let’s look!
The reputation of the insurance service provider
The reputation of the insurance service provider is very important as it is an indicator of its ability to meet its commitments. Look for things like service history, assets owned, solvency, number of subscribers, and claims payout ratio to get a clear picture of where they stand in terms of market performance and customer satisfaction.
Claims payout ratio
A higher claims settlement rate indicates that the insurance service provider honors the claims of its policyholders without giving them a hard time. It is important to always buy insurance from a service provider known for their high claims ratios, if you want complete peace of mind in case of need the insurance company will honor your claims.
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When it comes to the life insurance policy, look for additional benefits such as critical illness coverage, accidental death benefit, accidental disability benefit to, among other things to get the best value for money. The best life insurance policy will almost always provide you with these benefits as part of the insurance plan.
Getting a life insurance policy is something you should not delay at all. It’s one of the only ways to ensure your family’s financial health and to plan for your future financial goals. So whether you just want pure life cover, or want to build a corpus for your retirement; it is important to invest in a life insurance policy now.