Questions To Ask Before Taking life Insurance

Article by SjoerdN

When looking for Insurance we often think if we really need it? But that’s not the only thing we need to know. Since almost everyone suggests that it is important to take insurance, more important to know is what kind of insurance is required and what to know before taking life insurance?

Why take life insurance?

Life insurance is a security one buys for oneself and for the family. It ensures that if there is untimely death of the earning member, rest of the family don’t have to face the financial insecurity. Life insurance may also be bought to cover specific events during the life of a person through investment linked life insurance plans. So, life insurance should be taken by those

1. Having financial responsibilities2. Having people dependent on them3. Taken loans for home or car etc.4. Looking for secure investment options5. Looking for tax exemptions6. Planning for retirement along with insurance cover

So, identifying the need for insurance is the first crucial step. Purpose of insurance helps decide the type of insurance required.

What all to consider before buying insurance

After identifying the nature or the type of life insurance cover you want, next important things are1. Coverage – How much cover do I need? Calculating a life’s worth is as difficult as it is important. It depends upon the purpose and the nature of life insurance. If it is for the child’s education you may need to calculate how much you may need to spend and at what time to decide on the maturity amount. If it is term insurance, you will need to calculate all your financial liabilities, including loans if any, cost of living for spouse, children or other dependents such that they don’t have to face financial difficulties in fulfilling whatever you had planned for future.

2. Premium – How much premium should I pay? Premium you pay for the insurance depends upon things like nature of insurance, sum assured, age, health, duration of cover and other benefits offered by the insurance company. Life insurance in which you get some money in the form of maturity amount have higher premiums than a pure term insurance plan. Many life insurance policies will require you to undergo medical examination. Your medical report is important in determining insurance premium. Younger the insured person, lesser the premium as insurance companies consider older people more liable to health issues.

3. Benefits – What benefit do I get from my life insurance? Identify what benefits you will get out of life insurance. If it is a pure term life insurance, all you get is sum assured in case of death of insured during the insurance term. If it has to return of premium, you will get a maturity amount at the end of the insurance term. Similarly, if you are opting for investment linked life insurance like money back, endowment or child plans, it is netter to go through and understand all the benefits that you may get for taking the policy.

How to go about buying Life insurance

One you have decided upon the purpose of insurance and the sum assured, you will generally have an idea of what you are looking for. The next step is to compare insurance quotes of different companies so that you get the best deal.

Insurance is a long term commitment so make sure that you decide on a premium that is convenient for you to pay and sum assured is enough to cover your requirement.

About the Author

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