The decision to buy an insurance plan is going to be one of the wisest decisions you will ever make. However, the challenge starts after that when you’re flooded with information about hundreds of insurance products and you have to select one plan out of many. At that point of time, you need to be sure of what you’re getting into and for that you need to know why you’re getting into it. Your clarity of thought will decide what type of insurance plan you’ll buy and how useful it is going to be for you.
To help you think clearly, we bring to you a list of a few questions that you should ask yourself and based on your answers, take the decision:
1. Why Do You Want It?
For some, it is about the financial security of their family in case of an untimely death and for many others, insurance needs to provide security along with healthy returns on investment. Based on your priorities, decide on the kind of insurance you want to buy. Pure term policy is the type of insurance you would want for security while an investment and saving plans can give you security with returns.
2. How Much Insurance Do You Want?
This figure would vary for everyone and depends on the individual’s lifestyle, keeping in mind the future needs. Ideally, one should calculate an amount based on the financial needs of today and financial goals for next 15-20 years keeping inflation as part of the calculation. Spend some time to arrive at this figure as you won’t like to buy a plan that is less than what is actually needed or more than your requirements. The average consideration in the industry is approximately 10 times of your current annual income, but it can vary for different individuals.
3. Whom Should You Buy For?
The most obvious answer to this question is: for the earning member of the family. Insurance premium needs to be paid for the insured whose death can bring financial instability in the family. You need security against such risks and therefore make your decision accordingly. At the same time, you can buy insurance to cover health risks of your elderly parents or for children’s education and future goals too.
4. What Should Be The Term Of Insurance?
When you’re young, you can invest in term plans that help to cover up your obligations in case of an unfortunate death. However, as you grow old, it is better to re-evaluate your needs based on your savings and investments and can buy whole life plans to stay covered throughout life. There are plans available for a period of 5-30 years, depending on your needs.
5. Are You Ready to Pay High Premiums?
Whether you decide to purchase online insurance or go via your agent, the premium can be higher depending upon the plan you select. An investment-linked plan will be costlier than a pure term plan due to a variety of costs involved. Also, certain plans might start with lower premiums, but during the tenure of the plan, the premiums might rise. You need to be sure of how much your pocket will allow today and in the coming years to be able to continue with the policy.
6. Where to Buy From?
The easiest way today is to buy online. No need to go anywhere, sit in the comforts of your home and find out everything about every insurance product right at the click of a few buttons. What’s more, select the plan, pay the insurance premium, get a copy of your insurance certificate and all this will take hardly any time.
Do spend your time answering these questions for yourself. It is your hard earned money that is going to safeguard your precious future. Acting in haste might cause losses and put you and your family at financial risk. Don’t just go by what your peers say or an insurance agent suggests, do a thorough online insurance research before making up your mind.
Don’t wait for long either, get the answers of the questions now!