Purchasing term life insurance necessitates not only a practical approach but also understanding of which insurance policy fits you best. A rushed purchase or buying through referral/suggestion is not advisable. If the correct well-thought-out decision is not taken, your policy might not be suitable for your needs, which is the situation with the majority of buyers.
Furthermore, purchasing a term life insurance plan from a reputable company is always wise. Here is a checklist relevant to every kind of term life insurance purchaser. Later in this article, we have clearly explained everything you need to understand about term life insurance.
- Your Financial Situation
It is crucial for every purchaser to initially calculate their expenses versus their income. After all, an insurance policy is a financial commitment requiring you to invest in a consistent premium amount. Knowing your expenditures against your income will assist you in understanding how much you can allocate for investment periodically. It will also aid you as an investor in determining how much protection you and your family need. Understanding your financial condition, your possessions, obligations, etc., will empower you as an insurance buyer to understand your financial objectives.
- Knowing your goals
The aim of purchasing a term life insurance policy is to safeguard your family financially even after you are no longer alive. Therefore, as an investor and someone concerned about their family's welfare, you need sufficient coverage that will not only cover monthly expenditure but also ensure they have enough to maintain the lifestyle they desire. Additionally, there are specific goals and milestones in your life, such as the birth of a child, education, higher education, marriage costs, etc. These are milestones where you might require a lump sum of money to settle expenses that are unavoidable.
- Savings Strategy
Insurance specialists consistently recommend that when strategizing for your financial future, always amplify your expenditures by at least tenfold relative to your present earnings. This will provide you with an estimated sum, considering that inflation is increasing annually at a rate of 4%-5%. For instance, if your existing salary is Rs 11 lakh per year, your coverage necessity in this scenario would be Rs 11 crore in a few years. Once you calculate based on this guideline, you will comprehend what your forthcoming requirement will be.
- Policy term to invest in
Understanding the duration to allocate your policy for can be an overwhelming task, especially when agents attempt to upsell their insurance brand, irrespective of your needs. Let’s consider an example to understand this better. If you are 25, unmarried, and have no offspring, we recommend you invest in a term plan that will provide you with a lump sum amount for your wedding, upon the birth of your child, schooling, etc. You can schedule your insurance term accordingly based on the significant milestones you aim to achieve in your life.You could also have family aspirations where you intend to acquire assets like real estate, a vehicle, etc
- Life Coverage and Post-Retirement
Purchasing term life insurance to safeguard your post-retirement phase is a wise choice. However, nowadays, insurance providers offer tailored retirement schemes that buyers can opt for. There is no drawback in selecting both a retirement scheme and a life insurance policy, provided your financial situation allows it. However, if you can only manage a single policy, opt for a term life coverage plan, as it functions as a savings instrument while also ensuring your security.
- Is purchasing through an agent a good choice?
Initially, insurance plans were solely distributed through insurance agents. These representatives, however, primarily promoted policies from the insurance firms they were affiliated with. The buyer was not offered many options, and there was little focus on what best suited them. With trusted aggregators like Insurewinsure.com, buying insurance today has become more convenient. Furthermore, the removal of intermediaries has reduced premiums, making these policies more economical and accessible.
Once you have followed this checklist and reached a decision, you should possess adequate awareness of what to anticipate from your life coverage policy. In turn, this will only assist you in making the correct choice. We recommend that you avoid purchasing policies from representatives merely because a relative or acquaintance suggested them.
