Understanding your need

The first question you should ask yourself is “Do I really need a life insurance?” You probably don’t need a life policy if you are single, independently wealthy, don’t have large debts, and you’re not worried about how your death will impact your family financially. But if your children, spouse, parents or other relatives depend on your income, then the answer is yes – you probably do want life insurance.

Market reputation of Life Insurance Company

Before buying a life insurance, you must know the market reputation of the life insurer such as the number of customer complaints and grievance ratio. An insurance company's reputation will also indicate its ethics, its integrity and the best practices. One must choose a company with solid financial outlook. Make sure your money invested is in safe hands.

Claim settlement ratio

Claim settlement ratio of the company is the proportion of the total claims settled to customers by the insurance company against the total number of claims filed by the customer. A higher ratio implies that the greater are the chances of the settlement of a claim by the insurer. Higher the claim settlement ratio, better the insurer. For each life insurance company, the claim settlement ratio changes every year. Therefore, when choosing the insurer, you must check the claim settlement ratio.

The insurance policies have cash value death benefits, tax benefits, and retirement benefits etc. Therefore, it is good to know the ways you can use insurance policies. An insurance company’s reputation will also indicate its ethics, its integrity and the best practices. One must choose the company with solid financial outlook. Make sure your money invested is in safe hands.

Your objective

You must understand your financial goal when buying a life insurance policy. There are certain financial objectives and milestones in your life, like secure your family and other people who may depend on you for financial support, birth of a child, higher education, marriage expenses, and retirement income etc. Some life insurance policies can be used as savings. The insurance policies have cash value, death benefits, tax benefits, and retirement benefits etc. Therefore, it is good to know the ways you can use insurance policies.

Your financial status

When you’re ready to purchase life insurance, it is essential to first calculate your expenses and your earnings. This will help you understand how much you can invest on a regular period and how much life insurance covers do you & your family require.

Policy term to invest in

The term of the policy is the period for which a life insurance policy provides cover or the number of years you choose to insure yourself. Before buying a life insurance policy, you must know how long you need an insurance policy. If you buy it for 15 years, the policy is described as one with a 15-year term.

Tax Benefits

Tax savings featured under section 80C of the Income Tax Act, 1961, allow the policyholder to exempt from tax on premiums paid and the sum assured.

Before buying a life insurance plan, be very clear about the features & benefits it offers, such as the tenure, payouts, and premium amount and surrender rules, and how it fits in with your needs. The above will help you understand your Life Insurance requirement and make the right decision regarding the life insurance plan for your loved ones.