An essential part of financial planning is to prepare for the unforeseen. This means preparing for the worse for the sake of your dependents. If you are the breadwinner of the family, you would know that they depend on you for their financial requirements – whether it is to live a comfortable lifestyle or fulfil career dreams. Not only their personal life but financial life can get affected for the worse.
You can prevent it from happening with life insurance plans. Life insurance plans aim to create a safety net around your family. It might not be able to help family members to cope with grief, but it can ease the stress financial catastrophes cause.
So, if your goal is to ensure financial security for your family in the years to come, read this guide. It will help you know everything there is to know about life insurance plans.
What are Life Insurance Plans and How do They Work?
A life insurance plan or a life insurance policy is a binding agreement between the policyholder and the insurance company. The insurance company promises to pay a sum assured to the nominee on the unfortunate demise of the insured. In exchange, the policyholder is required to pay a regular premium.
A standard life insurance plan involves two to three parties – the insurance company/ insurer, the insured, whose life is covered, and the policyholder, who buys life insurance and is responsible for the premium payment. In some instances, the policyholder and the insured can be the same person, in others, they can be different.
Nevertheless, life insurance plans help the nominee or the family of the insured manage their necessary expenses after their loved one has passed away.
How to Find the Best Life Insurance Plans
Now that you know the concept and the importance of buying life insurance plans, let’s discuss what you can do to find the best life insurance plans:
- Understand your Family’s Financial Requirements:
Life insurance plans provide a death benefit, wherein the nominees are provided with the sum assured to help them manage necessary expenditures. Hence, it is crucial to ensure that the amount is adequate to meet the financial demands of your family. So, to do the same, go over your annual expenses, analyze your loved ones’ future goals, take inflation into account, and then make the decision.
Now, this doesn’t mean you have to depend entirely on the sum assured to lead a comfortable financial life. Having a supplementary sizeable savings fund to manage such expenses is also crucial.
While you are at it, give equal thought to the premium. With a high death benefit comes a high premium. Ensure that the premium you would be required to pay is affordable for you.
In a nutshell, the key is to find the right balance. The ideal coverage amount and an affordable premium.
- Take the Help of a Life Insurance Premium Calculator:
As mentioned before, it is important to choose life insurance plans that come with an affordable premium. You can do the same by taking the help of a life insurance premium calculator. It is an online tool that provides you with an estimate of the premium payable by you depending on your age, health condition, lifestyle habits and the life insurance plan you are choosing to buy.
- Compare Life Insurance Quotes:
Just like you explore websites to find the best deal on products for yourself, you should also compare life insurance quotes to find the best option in the market. You can select the best life insurance companies, get their life insurance quotes, and compare the list of benefits to find out which would suit you the best. Now that everything is online, you can get life insurance quotes online easily.
- Keep a Tab on the Claim Settlement Ratio:
Not only buying the best life insurance plans is important but buying them from reputable life insurance companies is of utmost significance too. To ensure that a life insurer is reliable, financially strong, and has a smooth claim settlement process, you can check the claim settlement ratio. It is an indicator of the claim settlement capabilities of the insurer. The higher the claim settlement ratio, the higher would be the chances of a smooth and hassle-free claim settlement process.
The Bottom Line:
Managing the expenses of the present should not be our only goal. Management of future expenses is also important. Life insurance plans help you plan for the future you might not be a part of.
Life insurance plans are the need of the hour! Buy them today.