Uncertainties in life can make us think more about the financial security of our loved ones. Life insurance is the first thing that comes to mind to fulfil such needs. The need for buying a suitable life insurance policy has grown further amidst the current COVID-19 pandemic.
While buying a life insurance policy, the selection of adequate life cover is a must. However, many people feel confused about it. You might have heard individuals asking – ‘How much insurance do I need?’
Parameters to Consider Before Selecting Life Insurance Cover
1. Life Goals
Most of the big goals in life – yours and that of your loved ones, require adequate financial assistance. For instance, you might have thought of preparing your child to receive higher education abroad. This would require an ample amount to pay for the related educational expenses. In case something happens to you, your children would have to compromise on their educational goals because of financial crunch.
2. Age
Wondering – ‘how much insurance do I need when I’m young?’ Most life insurance buyers do this while pondering over life insurance maximum amount. The truth is – your age at the time of buying life insurance is a significant parameter that determines sum assured selection.
At different life stages, financial needs change. You might not have many financial liabilities if you are in your 20s. But as your family grows, these liabilities are most likely to grow as well. For example, you might have planned to buy a new home or car in the recent future. A suitable life insurance coverage amount for your family would be the one with which they can maintain their lifestyle as it is.
3. Current Financial Liabilities
Ever wondering why bank officials ask for a nominee when you borrow a loan? They do this to contact the nominee for loan repayment in case something unexpected happens to you. Now, think of all the assets that you have purchased through loans. Your family would end up bearing the burden of these debts if you won’t be around, which is the last thing you would want to happen.
Even the simplest term insurance can help your family deal with such financial stress. To calculate an adequate life insurance coverage amount, you need to chart out such liabilities. Make a list of all the loans you have borrowed – organised or through money lenders, if any. Then look for different term insurance plans that can provide sufficient coverage at an affordable premium.
4. Regular Income
Whether you are self-employed or salaried, you know how difficult it is to sometimes deal with sudden expenses. For many people, their regular income is just enough to sustain their livelihood, let alone achieving big dreams. Irrespective of how much you earn, you want the best to happen to your family always, which is why buying life insurance is important.5. Estimated Working Years
Given the work you do; you might have made plans for your retirement. You want to enjoy life after retirement with your spouse, not worrying about the work-related mundane. A crucial aspect of retirement planning is to get done with major financial responsibilities during the working years. The life insurance coverage amount you choose should correspond to a premium that you can easily handle during these years of your life.
By having a fair idea of when you would like to retire, you will have a duration in mind within which you need to plan to pay for various obligations. Life insurance premium payment, which also becomes a responsibility, can be handled within your work life.Tips to Choose Life Insurance Coverage
Life insurance cover selection is a crucial decision in life. It will have a direct impact on the life of your loved ones. However, it is not the only thing you need to understand while choosing life insurance. Given below are certain tips for selecting the right life insurance coverage:
1. Add riders to your policy
You can further make the coverage more comprehensive by including riders. Various riders like Max Life Critical Illness & Disability Rider, Max Life Waiver of Premium Plus Rider (WOP), or Max Life Accidental Death and Dismemberment Rider are available to add benefits under specified situations. Make sure you check the rider terms before including them in your policy.
2. Use Life Insurance Calculators
Before you buy any life insurance plan, use online calculators to estimate the premium payable for a specific life cover. It is quite easy to use them, and you can check how the premium varies with different sum assured, the policy period, payment mode, and payment term.
3. Buy Life Insurance Online
You can avail many advantages of buying life insurance online, including the ease of comparing different plans, affordable premiums, and quick policy purchase. You can buy the policy from the comfort of your home or office without having to visit a local agent or insurer’s branch office.