Things you should get right while buying your Life Insurance

“A big part of financial freedom is having your heart and mind free from worry about the what-ifs of life” ~ Suze Orman
When it comes to insurance, ‘the sooner the better’ mantra acquires great relevance. So, without wasting the precious time, let’s come to the point. And, mind you, it’s not even about ‘should you insure or not? The question ought to be what are the insurance policies you need? Once you ask yourself the question, a foundry of questions will spring forth. Like what should be the insurance amount, the tenure, and so on. There’s a spectrum of policies that you can pick from today but the most important one is still the Life Insurance.

Life Insurance
Are you a primary breadwinner for your family? If the answer is in affirmative, you might’ve already holding a life insurance policy. In case, if you don’t, time is now to buy one. If insurance was all about Life Insurance Corporation (LIC) a decade back, now the market is filled with an array of players who sells Life insurance policies that comes in with various benefits. While we all know that we should buy “Term Insurance” when it comes to life insurance; but there are few things that most of us go wrong with, while buying this insurance-:

Insure yourself till 65
If you’re the major breadwinner of the family then, you need life insurance more when you’re young than in your old age. It helps your family to sustain their living even when you’re not around while you’re earning. But once you retire and get over with all the responsibilities (kids’ education, wedding etc.); you need no cover to protect your family anymore. Hence, make sure you insure yourself only till the age of 60-65 i.e. the age by when all the responsibilities would get over.

Your liabilities determine your need
Today an insurance of Rs.50 lacs or Rs.1 crore comes at about Rs.6k-7k and hence people are often sold an insurance policy for the above-mentioned amount. Just think for a moment now “What if you are no more to take care of your family”. Will Rs.50 Lacs or Rs.1 crore be enough for your family’s daily living, your kids’ higher education. You know the answer already! So take a look at your insurances now and see if they are enough or not.

Insurance is an expense
Insurances are a must have to live with peace of mind. At the same time, you also need to choose which ones suit you the best as your current income may not allow you to pay premium for all of the quoted above. Hence buy the ones that you need the most and rest can started later. Remember, insurance is an expense and will benefit you only when there’s a mishap. So, make sure you start with only those that fits in your budget now. “Over-pessimism” can be bad for your finances today.

Periodical Evaluation
Your job doesn’t just end with opting for an insurance plan for your family. You need to evaluate it on a yearly basis. Check whether the sum insured is adequate or you need to upgrade. Also, when there’s a structural change in the family with the advent of a new member, you may need to re-plan your insurance plans.

You have read it all. The long and short of it, and of course, the need to go for insurance. Pick yours wisely and live hassle-free!

Author:

SLA Financial Solutions is a Leading Advisory firm based out of Jaipur. We are amongst the top 5 Financial Advisory firm with a team of 20 + people. We have been awarded twice by CNBC as best Financial Advisor across North India.