5 Things to Know Before Investing in Life Insurance Plan

In today’s uncertainty of life having a proper financial backup is very important and the best to create wealth for future is to have a proper investment plan. Life insurance plans are often considered as one of the best investment instruments that not only help to save and collect corpus over a long period of time but also secures the financial future of your loved ones in your absence.

Deciding on to buy a life insurance plan is not a big deal. But, with the wide range of life insurance plans available in the market choosing the most beneficial plan often become confusing. Buying a life insurance plan can become a lot easier if an individual keeps certain aspects in mind while zeroing in on the life insurance plan. Here we have discussed in details some of the aspects to ponder before investing in life insurance policy.

  1. Know your Current Life stage- An individual pass through various stages as they grow older. These stages of life can be described like getting first job, buying home, getting married, having children and the retirement. The different stages of life require different goals and plans in order to have a proper financial backup. Per planning for all these goals in advance can help you to achieve them and can secure the future of your family and loved ones. Moreover, life insurance plans also help you to save enough money so that you can live a stress free life after retirement.
  2. Size of Life Cover- Everyone would want to have a large life cover, but it is very important for you to consider twice prior you decide on how much life insurance cover you need. The insured should keep in mind that the cover chosen by him/her should be adequate enough to replace the income of the insured and help their family over the difficulties in case of uncertain demise of the insured person. The insured should select the size of the life cover keeping in mind the debts (if any) they need to pay off. As the cost of living is increasing rapidly due to inflation the amount that looks big today might not be big enough at the time of maturity.
  3. Premium Payment- Life insurance plan premium is fixed for the tenure of the policy. Most of the life insurance plan offers four mode of premium payment i.e. on monthly, quarterly, Half-yearly or yearly basis. Before zeroing in on the plan carefully think about this: how much money you can pau annually towards your policy? It’s not wise to overestimate your finances and stretch your money in order to pay a hefty premium amount at the price of discontinuing your policy halfway. The premium rate of insurance policy depends upon numerous factors like your age, health, marital status and life coverage you desire.
  4. Choosing the Beneficiary- Naming your nominee is the most important step. It should be that member of your family who will need the money most after your demise. It can be your child, your spouse, or your parents. It is sensible to keep your nominee well informed about the salient features of the plan and any changes that is required to make.
  5. Online or Offline- How you should buy your insurance policy, online or offline. Although there is wide array of offline life insurance plans available in the market, purchasing online life insurance plan is more economical and involves hassle free process of registration. Moreover, the insurance seekers can compare various life insurance plans online and choose the most beneficial plan according to one’s own suitability.

Author Bio:

Financegab is a personal finance blog in India that helps to users for finding best information about insurance, tax planning, investments, mutual fund & loans.

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