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New to Buying a Life Cover? Consider These 4 Things

Posted: December 15, 2020

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Given the current condition post COVID19 lockdown in India, many people are looking forward to gaining knowledge about life insurance and its benefits.

Planning for financial security in life is crucial for everyone. Yet, not all people in India know about the importance of buying life insurance. The overall insurance penetration report says a lot about this aspect in factual terms – the penetration has touched the bar of 3.69% in 2017. It implies a big gap between the number of individuals who have invested in insurance and those who did not.

Given the current condition post COVID19 lockdown in India, many people are looking forward to gaining knowledge about life insurance and its benefits. Like any other investment decision, proper knowledge is essential to make the right decision. You should also know how to use life insurance premium calculators online before choosing from different types of insurance policies.

If you do not know much about selecting a life cover, here are four crucial things to consider:

1. Your Age

An individual’s age is a premium-determining factor. Irrespective of the life insurance company you choose, the life insurance premium payable depends on your age. It is because of the related risk of loss of life or various life-threatening diseases, which increases with age. At the insurer’s side, offering life insurance plans to young individuals implies lower risk.

If you want to know the difference in the premium of a life insurance plan at different ages, use an online life insurance premium calculator. Enter the basic details and change the date of birth for the same plan in the calculator to get an instant estimate.

In general, there is a considerable difference between buying a term plan – the simplest life insurance plan, in your 20s and 30s.

2. Sum Assured

Another factor that determines the life insurance premium is the sum assured you choose under a policy. In simple words, the sum assured is the quantitative value of your life cover. Insurance companies can offer you a sum assured of Rs. 20 Lakhs, Rs. 50 Lakhs, Rs. 1 crore, or more, depending on your eligibility. But it is up to you to decide which option to pick.

The higher the sum assured selected, the higher will be the premium payable. That is why you must analyze how much money you can set aside per month or annually for the life insurance premium. To gauge the difference between premiums for different sum assured selection, use online life insurance premium calculators.

3. Lifestyle

With a life insurance plan, you are planning for your family’s financial well-being in case of your untimely demise. The benefits of the plan will act as an income replacement tool for your loved ones. But for how long will the received benefits last after you are not around?

It depends on the current lifestyle that you and your family members follow. Hence, it is crucial to think about various regular expenses and existing liabilities before buying a life insurance plan. Reach an amount that your family would need per year to maintain their livelihood.

Then, multiply it with a certain number of years to get a fair idea of how much sum assured you should choose. Accordingly, check premium estimates using a life insurance premium calculator online.

4. Your Medical History

Being highly prone to life-threatening diseases also implies a higher risk of death. If an individual with a medical history including certain lifestyle diseases asks for life cover, the premium payable would be higher than a healthy, fit individual.

It would be best to buy a life insurance plan with a critical illness rider that offers protection from the illnesses you suffer from. You can easily check the ‘critical illness list’ covered under such a rider before adding it to your life insurance plan. The next step is to look at how the premium varies by including this rider, using a life insurance premium calculator.

Getting critical illness cover under a term plan also means that it will suffice for the healthcare expenses for possible medical emergencies.

Steps to Use a Life Insurance Premium Calculator

Most insurance companies in India now offer life insurance premium calculators to help policy buyers get a premium estimate in just a few steps. In general, the steps to use an insurance premium calculator include the following:

  1. Enter the basic details, such as name, gender, age, and income.
  2. Choose a specific sum assured.
  3. Select the premium payment period and the policy period.
  4. Add riders to the base plan.
  5. Get a quote online.

For every life insurance policy buyer, it is essential to understand various facets of the policy first. Then comes another step in selecting a reputable insurance provider. The selection of the right insurer is as important as buying the policy itself. So, do thorough research for both policy and insurer before you make any final decision. Stay insured to stay safe in these unpredictable times.

Picture credits: Shutterstock

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