How to Buy Life Insurance

How to Buy Life Insurance


Life insurance provides coverage in the event of your death, making sure that your family or other loved ones are provided for after you’re gone. But how do you go about buying it? To help with the process, we’ve put together this step-by-step guide on how to buy life insurance that will walk you through every aspect of purchasing life insurance and make it easy to find the best policy at the best price possible. And if you’re looking to get some extra tips on financial planning, read our full collection of financial planning articles now!

How to Buy Life Insurance


Life Insurance Corporation of India

The Life Insurance Corporation of India, also known as LIC, is a state-owned life insurance company that provides coverage on both a group and individual basis. For those looking for life insurance, it can be a good place to start your search. You can begin by exploring different policy options available through LIC or you can even shop around for similar policies from other companies. A lot of experts recommend getting quotes from at least three different providers and comparing each one side-by-side. By doing so, you'll be able to find out which company offers more affordable rates for similar coverage—it's all about shopping around!


Life Insurance vs Endowment Plans

One of India’s largest insurance companies, Life Insurance Corporation of India (LIC), offers both endowment and life insurance plans. A popular endowment plan is termed Majithia Scheme by LIC. It can be purchased by a customer in unit-linked or traditional format. The earlier plan had a maturity period of 60 years and has since been revised to extend up to 75 years. The amount paid for premium will depend on your age at commencement, age at death and total sum assured selected when making payment.


Types of Life Insurance Policies

There are many types of life insurance policies out there, including term and whole life. Each has its own set of pros and cons. Some people might need a permanent policy (whole life), but others might want a temporary one (term). No matter what you're looking for, it's important to figure out exactly what you need before jumping into an expensive purchase like life insurance. If you don't have an estate plan or any dependents who would benefit from your death, then term life insurance is probably all you need—and it's much cheaper than whole life! There are also other ways to protect yourself, including purchasing disability or long-term care coverage.


Life Cover Calculator

An easy way to figure out how much life insurance you need is with a life cover calculator. It asks a few questions about your situation and tells you approximately how much coverage you need. Keep in mind that you can always get more or less coverage than what's recommended, but it's smart to start with these numbers so that you don't overbuy or underbuy too much coverage. These calculators give you peace of mind knowing that your loved ones are protected even if something unexpected were to happen.


Do You Need Life Insurance?

To figure out if you really need life insurance, ask yourself a few basic questions. First, how much will your family be left with after paying off debts and other financial obligations? If it’s less than you would consider leaving them on your death, then life insurance may be an excellent option for you. Second, do you already have life insurance for those who depend on your income? If not—or if what you have doesn’t sufficiently cover all of your expenses—you should look into buying more coverage. Lastly, do any of your beneficiaries rely on public assistance in case something happens to you?


What amount do you need?

The amount of life insurance you need depends on many factors, including your dependents and your current financial obligations. Life insurance will cover funeral costs, monthly bills, mortgage payments, and more. To determine how much life insurance you’ll need, first consider these needs vs. wants. Do you have debts such as a car loan or credit card? Do you have children who depend on you for financial support? Are there any other obligations or expenses that must be paid off in case of your death? Add up all of these expenses and subtract them from your income; if there’s a shortfall (and most people find there is), that's how much life insurance coverage you should buy.


Why should you buy life insurance?

Life insurance can be confusing. It’s a big financial decision and a crucial one for your family’s future. Many people don’t understand how life insurance works, so it may feel like a mystery. But it doesn’t have to be complicated—particularly if you focus on three things: choosing term life insurance, buying only what you need, and getting coverage from a reputable carrier that won’t charge you extra for having poor health or being older. The rest of your money is better off in low-cost investments like index funds than it is in life insurance anyway.


Criteria for selecting a policy

If you’re planning on buying life insurance, it’s important to have a good understanding of what your different policy options entail. Many policies today offer you coverage for a certain amount of time, called your term; others provide long-term protection. The main difference between these is that with term coverage, your premium stays the same during the entire duration of your policy; in contrast, long-term policies can sometimes decrease in price over time. If you want insurance that will stay constant over an extended period of time—say 10 or 20 years—long-term life insurance might be worth looking into.


Comparison between Term Assurance Plans and Whole Life Plans

In India, both term assurance plans and whole life plans are offered by Life Insurance Corporation of India. While Whole Life Plans offer lifetime cover, only a certain period of cover is provided under term insurance. If you want to ensure your family’s future for an extended period, opt for a whole life plan. But if you need only a specific amount of coverage for a limited time period, go in for a term plan. Consider that with whole life plans, your premium remains constant during the policy tenure regardless of your age or health conditions. In contrast, under Term Assurance Plans, you pay lower premiums when you are young but they increase as you grow older.


Things to consider before buying an insurance policy

Before you make any final decisions, here are a few points that you should consider. Most insurance policies have an exclusion clause for those with pre-existing health conditions. Before buying a policy, it’s important to discuss your medical history and other information with an agent. It may be possible for you to buy coverage on someone who has no existing medical conditions if they are at least 30 years old. If your prospective beneficiary is young and healthy, you might also want to look into term life insurance instead of whole life—which could save you money in premiums over time.


Tax benefits on investments in life insurance plans

The premium that you pay for life insurance is a tax-deductible investment. You can buy both term and endowment plans at tax-efficient rates. When your premiums are debited from your account, it’s considered an outflow of cash from your account, reducing your taxable income by that amount. If you invest in a whole life plan, then you get the opportunity to earn more money through savings and investment on premiums paid earlier. And when you have received death benefits in a whole life plan, these amounts are also added back into your taxable income and hence increase your net taxable income by that much after tax benefits. These additional earnings in savings benefit depend on various factors such as interest rates or additional premium payments or loans taken during policy term, among others.

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