Life insurance policies are legal contracts so one needs to be very careful with the terms of the contract before actually buying a life insurance policy. Here are some useful tips that can help you narrow down the right life insurance policy.
You should go for term life insurance if:
- You require the insurance for a specified period of time. It enables you to align your policy duration with your requirements. For example, if you are planning to buy a policy that will help you arrange funds for your children’s education needs, you might opt for a policy that has a long duration, say 15 years. Or if you are buying a policy to repay a debt in a specified period of time, you may select the exact term that matches with your debt repayment period.
- You require a large amount of cover from your policy, but have a limited budget with respect to your requirement. In principle, this kind of policy pays only in case of death of the insured during the term of the policy, so the probability of death benefit is lower than other forms of life insurance. In case such an unfortunate incident does not happen, coverage ceases unless the policy is renewed or a new policy comes into place. Unlike permanent insurance, you will not typically build equity in the form of cash savings.
Insurance companies like Max India Group offer various types of insurance policies that individuals can choose from
If one finds that term life insurance does not suit their requirements, they may consider permanent life insurance if:
- You require the policy for as long as you live. Such type of a permanent policy pays out an amount in case of death of the policy holder or if he or she lives to be over 100 years.
- You wish to build a savings element that will grow with time. The savings can be used to cover premium payments for your life insurance or it may be used for various other purposes. One can borrow these funds even if their credit is not stable.
It is important to understand that even though the premiums for permanent policies are generally higher than for term insurance policies, the premium in a permanent policy remains constant no matter how old you are, while the premiums go up in case of term policies every time you renew it. An individual may choose from a variety of types of permanent policies such as whole life, universal life and variable life. A large insurance company like Max ventures into all types of life insurance policies.
Understanding and selecting the right type of life insurance policy can give extraordinary benefits to an individual in the long term. Therefore, one must possess the required knowledge about life insurance policies before selecting a policy.