Buying Life Insurance- A Crucial Piece of Your Monetary Plan

Life insurance is a tool specifically to protect your near and dear ones from contingencies and financial crisis in case you die uncertainly. But, most of the people usually diverge from its main motto of protecting financial health of a family in case of any mishappening occurred on to the bread earner. People consider it only as a tool of giving them a:

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• Good amount of returns at the time of maturity.

• Good amount of tax advantage.

• Good sort of investment to protect the retirement.

Aiming at all these parameters, they end up taking a life insurance like an investment where they get some good returns and a high value of money of the end. And, the main motto of protecting the financial health of the family at the time of uncertainty gets a lower jump of just 10 times of the value of the yearly premium in most of the cases. So, you end up in buying a life insurance with a life cover of just a minimal amount as compared to the returns you'll get. 

But, have you ever wondered that with just a minimal amount of life coverage, whether your family is financially secured? What if you die the next year after purchasing a policy? Will your family gets a required return on investment on the policy that you have chosen considering above mentioned factors?

The answer to it is “nothing”. Even a dream of all these questions will make you restless. So, one should consider buying a life insurance as one of the crucial pieces of your monetary plan.

Read the following important factors you should consider before buying a life insurance policy:

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• Consider it as a crucial piece of your portfolio: Life insurance is to be considered as a crucial piece of your portfolio or a monetary plan as it will determine the future of your loved ones when you’ll not be there with them. So, lots of research and verification is to be required before getting a life insurance. 
• Consider your life insurance only for one main factor : Protecting your family: One should always consider your life insurance as a weapon to protect your family from financial hazards at the time of your untimely demise. It should not be considered as an investment tool to earn good returns at the time of maturity. This aim will protect your family from a financial crisis with a good amount of financial help.
• Go for Term insurance rather than endowment plans: Term insurance will give you a policy that focuses on the amount of money which your family will get at the time of your untimely death. In this plan, premium will be lower and you’ll not be entitled to any maturity benefit but, this will give you a feel of pure life insurance policy and not an investment tool. Endowment plans, on the other hand, will charge more premiums and less amount of life cover in comparison to term plans.
• Add Riders judicially: Many companies now a days offer various riders on your Life insurance policy which will increase your amount of premium. Some of these riders include health cover, personal accident cover, permanent disability cover and many more. Opting these riders should be judicial in nature. If you already have a health cover from your company or you have taken it separately, do not go for this rider along with your life cover. Similarly many banks now a days give personal accident cover on your debit cards, credit cards, bank accounts and if you have them then do not add personal accident rider for your life cover. All these unnecessary additions will bring your premium to the higher side.
• Check the Claim settlement ratio of the insurer: One must check the claim settlement ratio of the insurer in the past i.e. how many cases the insurer has actually settled out of the total cases. This ratio will give you an idea of the risk associated by going with that particular insurance company.
• Important facts should be disclosed without any tidings : It is always recommended that all the important factors related to your habits, at present diseases, your health and family history should be disclosed to the insurer without any tidings. By not doing so, you are keeping your loved ones at risk of not getting the claim at the time of your untimely demise.
• Do not involve much of your money into life insurance: This is advisable to keep your premium to the lower side as you can invest your money elsewhere, where you can earn good amount of money.

Life Insurance is a much-needed investment, but, it is advisable that one should not call it as an investment, rather call it as a protection. Don't treat it as an investment but only as a tool to protect your family from contingencies and financial risks.