7 Things To Keep In Mind When Buying Life Insurance Life insurance has become more of a necessity in today’s times, not just for independent individuals but also for those who have loved ones depending on them financially. However, despite this rising need, the awareness around the importance of insurance is still not very high in India. This, in turn, has led to many people being unaware about the several aspects which are crucial when it come to purchasing insurance. While here are many people who still do not feel the need to purchase insurance, there are several others who commit grave mistakes when buying insurance, mostly such as not purchasing adequate life cover, not insuring their stay-at-home spouse, not being aware of the terms and conditions of the policy document, and several others. Due to these mistakes, the insured can never get the maximum benefit out of their life insurance policy. Listed below are the 9 essential points which you must consider when it comes to purchasing a life insurance policy. ●Buying The Wrong Type of Life Insurance

Life insurance policies are available in a number of varieties, each of which differs in terms of its working, structure, features and the benefits it provides. Before you buy any life insurance policy, make sure that you have read and understood all the terms and conditions accompanying the policy such as the placement of premiums, returns expected, flexibility offered by the policy, the policy value on maturity or following the death of the insured, etc.

If you are looking for a policy which not only provides higher returns but is also offers flexible terms, you will have to look for something other than a traditional life insurance policy. In a similar way, if you are not looking to purchase a life insurance policy solely with the objective of receiving returns, you may end up purchasing a Unit Linked Insurance Plan (ULIP).

Pure term insurance policies are highly ideal for individuals who wish to provide financial protection to their financially dependent loved ones as these policies provide extensive cover a an affordable cost. Do remember that purchasing life insurance is a major, long-term financial commitment which will cost you if you cease it mid-way. Ensure that you spend enough time to understand the details and terms of the policy which you decide to choose and pay for.

●Purchasing Insurance A Goal In Mind

More often than not, insurance is purchased to either save tax or to start with the process of saving. The fact that the sum assured in maximum cases is inadequate, coupled with the statistic that most insurance policies are purchased in the last few months of the fiscal year, are proof enough that most individuals purchase insurance with no goal in mind. When it comes to insurance, it is necessary that you link it to a goal. For instance, if you want to purchase a term plan, the ideal objective for it can be to create a corpus for fulfilment of future financial goals such as funding your child’s education, wedding, etc. With a goal in mind, you can decide the tenure for which you want to purchase the plan. In a similar way, a Unit Linked Investment Plan (ULIP) or equity fund are ideal goals for those looking to create a retirement fund for themselves. Having a clearly distinguishable goal linked to your insurance purchase can greatly cut down the chances of one exiting from their policy mid-way and losing money.

●Fill Up The Application Form Yourself Many people rely on insurance agents to take care of little things such as filling up insurance forms, etc. What they may not realize is that this can make a significant difference at the time of filing a claim. Ideally, the insurance form must be filled by the policy taker themselves as, part of the underwriting process, there are many details pertaining to health, dependents and finances which they (policy taker) is required to disclose at the time of application. If you fill up the form yourself, not only will you

get a better grasp at the process of insurance but can also ensure that correct information is being provided to the insurer, which can eliminate the chances of any unexpected hindrances at the time of filing a claim.

●Working Couples Also Require Insurance

Often, working couples (both spouses working) often overlook the need for insurance, considering neither is financially dependent on the other. However, in the unfortunate event of the passing away of one spouse, the survivor will have to bear the burden of maintaining of not only maintaining the standard of living as before but also fulfilling financial obligations in case there are loans to be repaid. With only one earning member, the financial goals of the dependent family members could well become unsettled. For this reason, it is necessary that both the income contributors be insured adequately. In case of working couples, life insurance with the joint life option can be an ideal option to avail adequate life protection cover.

●Forgetting To Update Nominee Details Often, when taking insurance, policyholders postpone naming a nominee in their policy. This delay in nominating can cause legal issues between the surviving family members or relatives in case of the untimely demise of the insured. In case of an unmarried policyholder where the nomination has been made in favour of their parents, nomination detail must be changed without delay once the individual is married, so as to avoid any legal or interpersonal issues. Nomination in insurance policies is done to ensure that the proceeds from death claim are passed on from the insurer hands to the nominee. Until recently, the beneficiary named in the insurance policies were different from nominees. Beneficiaries would only be required to receive the proceeds from the insurance policy and hand it to the insured’s legal heir. Only in 2015, the Insurance (Amendment) Act 2015 was revised to create a 'beneficial nominee' category, which combines the capacities of a beneficiary and nominee, thus allowing the named person not only receive the insurance proceeds but also be the ultimate beneficiary.

●Review Life Cover With Age

As we age, our life insurance requirements also change what with deteriorating health, financial obligations and the like. As we proceed forward with different stages of life, from unmarried individuals to married with a spouse , followed by kids, our insurance needs change. Add to that the burden of unpaid loans, children’s education, wedding, etc., the original amount and type of life cover that was once adequate will no longer be sufficient. Given his, do not forget to review your life insurance cover at every stage of life to ensure that you and your loved ones are adequately covered.

●Purchasing Inadequate Insurance Cover The purpose of purchasing insurance is fulfilled only when it is taken in adequate measure. Neither over-insurance nor under-insurance are helpful under any circumstance. Insurance is primarily meant to replace the income that is lost with the loss of an earning family member on whom dependent family members rely. However, many people purchase insurance to either save tax or accumulate funds to a long term goal. Similarly, underinsurance too doesn’t help in shouldering the financial burden which befalls your family when you are no longer around to provide for them.