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