As your responsibilities grow, it becomes increasingly important to protect the current and plan for the future. Life Insurance is an effective financial planning tool that provides multiple benefits ranging from Protection, Savings, Tax Benefits etc. But before you purchase a life insurance policy, it's important to be well equipped to choose a plan that meets your needs and requirements.
Keep these 5 things in mind as you go about your life insurance buying decision:
Buy for the Right Reason
Understand the purpose for buying insurance. Remember that you are buying insurance to plan for some specific goals, cover your life and safeguard the financial future of your dependents. Do not buy insurance only for secondary benefits like tax savings.
Amount of Life Cover
The premium amount is generated based on the life cover amount that you opt for. As a rule of thumb, your life insurance cover should be at least 10 times your annual income. You can also use our premium calculator to arrive at a premium estimate.
The ideal tenure of your Life Insurance Policy should be your ‘Retirement Age minus your Current Age’. This means that if you are currently 35 years old and wish to retire by the age of 60, your policy tenure should be 25 years. Some policies also cover your whole life (up to 100 years of age). Popular term plans also offer high life insurance cover till age 75.
Additional Coverage & Benefits
Add-ons are additional benefits along with the base cover, such as critical illness rider, accidental death benefit rider, waiver of premium rider, disability rider etc. You can read more about the various types of riders here. These are beneficial additions available at highly cost-effective premiums.
Credentials of the Life Insurance Company & its Claims Experience
Before buying a life insurance policy, it's important to be assure yourself on the credentials of your chosen life insurance company.
- Claims Settlement Ratio - This refers to the no. of claims paid by an insurance company for every 100 claims that were registered. At Max Life, 96.23% of the total claims were settled in 2015-16 (Src. Public Disclosure).
- Assets Under Management (AUM) - This refers to the current market value of the funds managed by the financial services company. A higher AUM suggests that the portfolio is strong and performing well.
- Solvency Ratio - This is a ratio used to measure the financial stability of a company. It reflects the company’s ability to settle its long-term debts. A higher solvency ratio means that a company is comfortably placed to pay out claims. Max Life has a solvency ratio of 343%, more than 2.2 times the mandatory 150% which indicates our strong and stable financial position
In addition to these, excellence in customer service, reviews and corporate governance practices give vital information about the overall performance of the company. Read more to learn about Max Life as an organization. Also, you can go through the different types of plans offered.