Searching for a life insurance plan? The 1st thing to ensure is the purpose of your buying life insurance. After that your approach should be to decide on the value of sum assured and the insurance company to buy from.
Life insurance forms an essential requirement of people having dependents as well as fixed obligations.
Role of life insurance policy in financial protection-
Financial investment planning protects you from potential financial difficulties. And life insurance purchase forms an integral part of financial investment planning. It secures your family during any untoward incidents.
However, what can confuse the minds of people is arriving at an appropriate sum assured amount of policy.
Certain insurance companies alter their policies of life insurance plans every few years. Hence, it is a rational step for every person to do car insurance comparison.
Changing life insurance needs-
Life insurance requirements of different people change with time. For example unmarried young person whose parents still provide all the financial support don’t need life insurance. However, after marriage and giving birth to kids, it increases the number of dependents. As a result, it becomes important for the person to get life insurance to give financial security to the dependents.
Review your policy regularly-
Each insured person should review his life insurance plan periodically to incorporate the changing needs. There are several factors which form the basis of determining insurance needs like marital status; age and earning power of family members.
Don’t be under-insured or over-insured-
When you’re under-insured, your family will have to bear frequent financial hardships after harsh incidents like the insured’s death or disability. Similarly, when you’re over-insured it would result in unnecessary wastage of hard earned money which could have been used for other important needs.
Several methods support calculation of individual insurance requirements. It depends on one’s earnings potential as well as his ability to pay certain premium amount.
In any case, remember that the insurance policy must be able to:
•Provide enough financial protection to your dependents and family members when you’re no longer able to. The basic needs of food, clothing and shelter as well as children’s education must be easily met supporting current living standards.
•Once the basic needs are met, you must allocate long-term savings plan which will take care of future goals like child education and marriage, buying house, vehicle etc.
•In order to live and maintain respectable living standard post retirement you need to have a pension plan in place. Getting pension plan early in life when one is healthy and young requires you to pay lower premiums than at an older age.
•Finally, your aim must be to grow your wealth. Judicious financial investment planning helps one to create a path towards fulfilment of long- term goals. There are macro factors like inflation which needs to be considered. Your life insurance India policy must be able to wipe out the effects of inflation as well as increase the person’s wealth corpus over a period of time.