Life Insurance Policy: When buying life insurance, many important things have to be kept in mind. This not only helps in choosing a better coverage plan, but also reduces the premium expenses. Health status, lifestyle is also taken care of to determine the premium.
new Delhi. The decision to buy a life insurance plan for all of us also depends on how much we have to spend on its premium. It’s but natural. However, this policy should not be at the cost of agreement in coverage. The agreement in the policy cover will mean that the purpose of buying life insurance will not be fulfilled. In such a situation, to reduce the premium burden without reducing the benefits of policy cover, we have to understand on what basis the insurance companies decide the premium. For this, what things do they keep in mind.
Premium payment depends on many factories
Life insurance is a critical tool for financial risk management. Risk depends on the demographic and socio-economic status of each person. Simply put, the death rate of a young person will be lower and they will usually have to pay less for the same cover than an older person. Similarly, if two people of the same age live in two different places and their health status and earning capacity are also different from each other, then they will have to pay separately for the same policy.
Experts say that health status and lifestyle also have an important role to decide the premium. Apart from this, depending on many things of the insurance product, what will be the cost of the premium for which policy. Even if you want to get your capital back under your policy cover, you will have to pay more on the premium due to its savings component.
thus we can understand that age, sex, health status, condition of paying premium, term of policy Keeping in mind the premium is fixed for any insurance policy only. However, if you also want to get better coverage at a lower premium, then you can read the following 5 things carefully.
1. Buy a life insurance policy at an
early age. Buying a policy at a young age like 28-30 has its advantages. Buying a policy at a young age means that it will be pocket friendly. Responsibility also increases with increasing age. During this time, buying insurance can be expensive. Simply put, buying a policy at a young age gives all the benefits of life insurance at a low premium.
2. Buy
a Term Policy Term insurance acts as an essential financial tool in any person’s investment portfolio. This proves to be helpful in difficult situations even if you are not there. Even for large cover in term insurance, the premium amount is low. This cover is available only when the person who insured dies. You can make it better in terms of accidental death like serious illness or accident. Such plans should be taken for a long period. Experts say that a 35-year-old person should take an insurance cover of at least 10-15 times more of his annual income. However, in such a policy, no amount is received on maturity.
3. Choose the right policy
Choosing the right life insurance policy also means that you also save on your premium expenses. Life insurance policy should not be reduced in duration. On the other hand, it should not be too long. To choose the right duration, you have to keep in mind one thing. For this, it should be checked that in which year after the total liability is over, your total investment will be more than the life insurance plan.
Suppose there is currently a term insurance that gives 40 years of coverage. However, in practical terms it is difficult to know when the total liability of a person will end in the long term. In such a situation, it would be better to take a policy up to the age of retirement than insurance with a duration of 40 years. If a person buys life insurance at the age of 40, then they should buy a life insurance policy till the age of 60 or 65 years.
4. Compare plans before buying life insurance
It is important to compare insurance plans keeping in mind many things including premium, assured amount. Apart from this, the claim settlement ratios of different companies should also be compared as they also play an important role in buying a term insurance policy. This shows that what percentage of claims an insurance company wants to make in a single financial year. Suppose a company says that its claim settlement ratio is 91%, then it means that the company has paid 91 claims in 100 claims in a financial year, while the other 9 claims have been rejected.
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5. Avoid buying non-essential riders
When it comes to buying life insurance, riders are available in the insurance market at a very economical rate. You can be attracted by their economical price. Term insurance riders are attached to a type of term insurance policy. This gives the policy holder additional coverage. Generally, the cost of these riders varies depending on the term plan. In such a situation, it is important for you that before buying any kind of rider, you can do better research about it.
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