Choosing the right insurance policy for family and for oneself has become crucial in the times of turbulent financial markets and various other unexpected events. It not only determines the concern that we get when our physical wellbeing takes a wrong turn, but is also very helpful for designing a well-structured fiscal plan.
An insurance cover offers many advantages ranging from monetary assistance at the time of unanticipated demise of a major income earner of the family to offering sound monetary future to the family.
Tips for Choosing an Insurance Policy
While selecting the right insurance cover, one should always consider her/his present earnings and the estimated competence to forfeit the insurance premiums at the allotted dates besides the age factor, future fiscal strategies, medical condition, etc.
Other factors which needs to be taken into consideration while selecting the right insurance policy are the policy's cost-benefit ratio and guaranteeing that the insurance envelops all your family members along with the common health issues.The cost benefit ratio of the insurance policy relies on many factors such as what is insured and what are the benefits that come along with it.
Hence while purchasing the policy one needs to keep a strict vigilance on the price of the policy and guaranteeing that the policy rationalizes the benefits included under it.
Besides keeping a close eye on the advantages, the policyholder should also ensure that the promises made by various insurance firms are adhered by.
The different types of covers that people generally prefer are:
Pure Term Insurance: Pure Term Life Insurance offers insurance cover for life for certain period of time. However, the cover offers no maturity advantages but on the demise of the assured, the total amount insured is completely forfeited to the next of the kin.
Endowment Policy: A life insurance agreement structured to forfeit the total amount after a certain maturity period or on the event of the assured demise is known as an endowment policy. The policy offers fiscal safety for a specified tenure. The purchaser forfeits sporadic premiums for a specific tenure and continues to stay protected for that particular tenure. If the policyholder stays alive till the conclusion of the tenure, he is entitled to receive the fund balance.
Unit Linked Insurance Plan (ULIP): ULIP offers life cover in which the policy cost differs from time to time depending on the price of the principal assets at the given point of time.
Money-back Policy: Money-back Policy is the alteration of endowment plan. The basic difference lies in the maturity advantages that are forfeited by the bank at the end of endowment tenures. Money back policies offer cyclic imbursements of partly continued existence benefits during the tenure of the cover.
Retirement Policy: A modification of endowment plan, the only disparity lies in the format of the policy both in terms of tax benefits and desired age of the applicant.
When to buy an Insurance Policy
To choose an insurance policy directly depends on the applicant's age, profile of dependants, family expenditure, current earnings and tax benefits. Here are few suggestions on when to buy the right insurance plan:
Pure term Insurance: It is better to purchase the pure term insurance as early as possible, if you have long-standing responsibilities like automobile loan or home loan. Buying this policy will guarantee utmost financial protection to applicant's family after his demise, sans any extra investments.
Retirement Policy: The right time to buy this policy is when the prospective applicant reaches his early thirties. This plan forfeits the lump sum amount at the time of the retirement which you have invested as yearly premiums.
Whole Life Plan: Purchase this policy if you desire to accrue finance for your family members and provide monetary support in case of any unexpected event.
Endowment Plan: Buy the policy for your son or daughter when they have reached maximum age of five in order to accumulate funds for a particular reason such as your infant's education or your daughter's wedding.
Money-back Policy: If you desire to be given intermittent monetary payments to correspond with different period of your life such as kid's primary education or for higher studies, purchasing the Money-back Policy would be the right decision on your part.