A lot of people keep thinking whether to buy life insurance or not. Then there are those who think that buying a small Rs. 5 lakh insurance policy will be enough. By the time they realize how wrong they were, it’s already too late. Either they are so old that premiums are very high, or they are already dead.
The reason most people delay in buying adequate insurance cover is due to the doubts they have. As an individual with family, it is one’s biggest financial responsibility to ensure that his dependents are taken care off in case of his death. Life Insurance is the simplest way to fulfill that responsibility.
A major cause of financial distress in life of dependents, after the death of a person is that the person was under-insured. So, the most important step in buying insurance is to calculate the right coverage amount. Your insurance plan should cover all outstanding liabilities, provide for future day-today expenses and major life goals. There are some thumb rules which will help to calculate the amount. Like the one that says to buy a policy with at least 10 times the annual income. However, one should give some thought to individual’s specific situation and needs and then decide what the right cover should be.
Choosing the right insurer is also very important Make sure you know about claim settlement ratios, solvency ratios etc. These ratios tell how likely it is that the claim filed by dependents, in case of your death to be settled. It also tells whether the insurance company is financially capable of providing claims or not. You don’t want to buy a big enough cover from a company, which has a lower chance of being settled by it.
So make sure that you get all your doubts cleared before it’s too late. If you still have any doubts, do not hesitate in getting in touch with a financial advisor.