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IN THIS POLICY, THE INVESTMENT RISK IN THE INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER
 

7 Tips to Buy a Life Insurance Plan for Yourself

In times of unpredictability, one needs to be certain about the security of their loved ones in their absence. One of the best ways to ensure that your loved ones are financially protected even when you are not around is through a life insurance policy.
 

A life insurance policy is a legal contract wherein the insurer assures a specific amount in case of the death of the insured during the policy tenure in exchange for premium payment. A life insurance plan can also have a maturity benefit that is paid to the policyholder if the policyholder survives the tenure of the policy.
 

Although a life insurance policy is a primary tool to safeguard the interests of your loved ones, it has other benefits as well. Certain life insurance plans act as saving instruments, whereas, with plans like Unit Linked Insurance Plans (ULIP), you can get market-linked returns2 along with life insurance cover. You can also opt for term insurance plans that are pure protection life insurance plans.  Also, you can get tax* benefits on life insurance plans.
 

There are plenty of reasons for buying ideal life insurance. But, the question is how to choose the right life insurance policy for yourself.
 

If you are looking to buy a life insurance policy, here are some life insurance tips that will help you.

Life Insurance Tips and Advice to Buy the Right Plan for Yourself
 

Buying an ideal life insurance plan can be difficult, so we have some life insurance tips and advice that will help you. These tips include:

  • Assess the goals of buying a life insurance policy


    Everyone’s goals differ. There might be some goals in your mind while you buy a life insurance plan. The assessment of these goals is essential to understanding the life insurance policy that you need.


    For example, if the pure life cover and financial protection of your family in your absence is the goal, then a term insurance policy is ideal for you. But if you are looking to save for your child’s marriage or for buying a house, you can opt for a guaranteed1 return policy. Also, if you are looking for wealth creation through market-linked returns2, you can opt for ULIP insurance. The life insurance premiums differ on the basis of the plan that you choose.
     

  • Calculate the amount of insurance cover you require


    Many financial analysts and advisors suggest that the life insurance cover should be at least 10 to 15 times your annual income. But there are some things that this estimate does not include. If you have an outstanding loan, your family might not be able to afford the instalments in your absence. Also, inflation can affect the spending capacity of your loved ones.


    To know the amount of life insurance coverage that you need, understand the following:
     

    • The annual expenses of your family and the number of years for which income replacement is needed.
    • Any outstanding loans or the cost of mortgage repayment.
    • The money that you need to save for the future of your child.


    For all the expenses that you have calculated, subtract any investments or liquid assets like cash in the bank or in hand. Now, you will arrive at the ideal life insurance cover that you need.
     

  • Determine the life insurance premium that you can afford


    There are life insurance premium calculators that you can use to estimate the amount of premium that you need to pay for a policy. Analyze different life insurance policies to understand the policy that offers more amount of coverage at the lesser premium. Remember, premium payment is essential to keep the policy active. So, it is essential to choose a policy whose premium you will be able to afford in the long run.
     

  • Choose the right policy tenure


    The term of the insurance policy should ideally be the number of years for which your family is dependent on you financially. You can calculate the ideal policy tenure by subtracting your current age from the age at which you wish your life insurance policy to mature or the age at which you wish to fulfil a certain financial goal.
     

  • Select a reputable insurer


    Before you choose a life insurance provider, it is essential to check the CSR (Claim Settlement Ratio3) of the insurer. The CSR is the ratio that defines the number of claims that the insurer has settled to the number of claims that the insurer has received. If the CSR of the insurer is more, there is a better chance that your claim will be settled without any hassles.
     

  • Be honest with your life insurance provider



    In case you consume alcohol or tobacco in any form, it is essential to inform your insurance provider. Also, if the nature of your work is hazardous, it must be revealed to your insurer. Also, mention the family and personal medical history. These things help the insurer determine your risk profile. Being honest with your insurer about these things will help you from claim rejection in the future.
     

  • Choose a comprehensive life insurance policy


    In many situations, a base life insurance plan can prove to be inadequate. Insurers offer additional coverage, known as riders#, for certain situations.


    For example, if you choose a critical illness rider#, you will receive a lump sum benefit when you are diagnosed with any of the critical illnesses mentioned in the policy.


    Similarly, if you choose an accidental death and dismemberment rider,# you will receive benefits if you face accidental disability or death. Thus, customise the policy as per your requirements with the help of rider#.
     

  • Conclusion

    Life insurance is one of the most important financial tools. It is also one of the top things that you need to consider when you make a financial plan. Before you buy a life insurance policy, ensure that you keep these life insurance tips and advice in your mind. Research well, analyze life insurance policies, and make a wise decision. 

    L&C/Advt/2023/Jan/0301

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

View all posts by Tata AIA Life Insurance

Frequently Asked Questions

How can I get the most out of my life insurance policy?

To get the most out of your policy, ensure that you select the right sum assured(life cover and maturity benefits) and accurate tenure of the policy. Also, analyze different policies, choose the right policy, and customise the policy with the help of riders#.

What is the right age to buy a life insurance policy?

There is no specific age to buy a life insurance policy, but it is advisable to choose a plan when you are young. When you are young, you are not prone to illnesses and are relatively healthy, which means that you will have to pay a lower premium for more coverage. 

Disclaimer

  • Insurance cover is available under the product.
  • The products are underwritten by Tata AIA Life Insurance Company Ltd.
  • The plans are not guaranteed issuance plans, and they will be subject to Company’s underwriting and acceptance.
  • For more details on risk factors, terms and conditions please read the sales brochure carefully before concluding a sale.
  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and does not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.
  • *Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.
  • 1Guaranteed Returns/Payouts depend on Plan Option, Policy Term, Premium Payment Term and Age at entry.
  • #Rider is not mandatory and is available for a nominal extra cost. For more details on benefits, premiums, and exclusions under the Rider, please contact Tata AIA Life's Insurance Advisor/ branch.
  • THE LINKED INSURANCE PRODUCT DO NOT OFFER ANY LIQUIDITY DURING THE FIRST FIVE YEARS OF THE CONTRACT. THE POLICYHOLDER WILL NOT BE ABLE TO SURRENDER/WITHDRAW THE MONIES INVESTED IN LINKED INSURANCE PRODUCTS COMPLETELY OR PARTIALLY TILL THE END OF THE FIFTH YEAR.
  • Past performance is not indicative of future performance.
  • All investments made by the Company are subject to market risks. The Company does not guarantee any assured returns. The investment income and price may go down as well as up depending on several factors influencing the market.
  • Please make your own independent decision after consulting your financial or other professional advisors.
  • 2Market-linked returns are subject to market risks and terms & conditions of the product. The assumed rate of returns or illustrated amount may not be guaranteed and depends on market fluctuations.
  • 3Individual Death Claim Settlement Ratio is 98.53% for FY 2021 - 22 as per the latest annual audited figures