We all work hard to fulfil our family’s needs and ensure their happiness. And if you are the only earning member of the family, you would want to ensure that your loved ones have financial stability even after you are gone. The best way to accomplish that is to purchase a life insurance policy for your family that covers every member. 

Many insurance companies in India offer a variety of life insurance policies to suit different needs of the people. In this article, we will discuss a few tips to purchase the right plan. 

Choose the right policy

First and foremost, assess your family’s insurance needs and know what type of insurance policy suits you the most. One of the most popular types of life insurance policy is term insurance. It is the simplest form of life insurance and has the most affordable premium. If you are looking for a simple policy that offers death benefits at an affordable price, a term plan will suit your needs.

There are other life insurance policies like retirement plans, ULIP (Unit Linked Insurance Plan), endowment plans, etc. Apart from offering life protection, these plans also have investment or saving components that allow you to build a corpus in the long run and accomplish your long-term goals. If you want to purchase life insurance that provides maturity benefits, you can choose any of these plans. 

Choose the suitable policy tenure

Choosing the right policy tenure is as important as choosing the right policy. If you choose a life insurance period for a longer tenure, you may end up paying a higher premium than you should. And, if you choose a short-term policy, the whole purpose of life insurance may be defeated. 

So, what is the suitable policy tenure? Experts suggest that the life insurance policy tenure should be long enough to give your family time to become financially independent. Also, if you have a significant debt like a home loan, the policy should cover the entire repayment tenure. This will ensure that the family does not face any financial hassles if something happens to you before repaying the debt. 

Choose the right sum assured

The most critical aspect of a life insurance policy is the sum assured. It is the amount that the insurance companies pay the nominee in the event of the policyholder’s demise. While many people prefer buying a term life insurance with a sum assured of ₹2 crores or more, you must decide if it suits your needs and budget. 

If you are confused, it is best to follow the thumb rule, which states, your life insurance policy’s sum assured must be 15 to 20 times your annual income. For example, if your yearly income is ten lakhs, you can choose a policy with a sum assured of ₹1.5 crores or ₹2 crores.

While this is not a hard and fast rule, it will guide you in the right direction to choose the right sum assured. What matters is the sum assured must be large enough to cover your family’s expenses for a few years till the dependent members stand on their feet. 

Choose the riders prudently

Riders or add-ons are additional coverage options that you can voluntarily buy with your life insurance policy by paying an additional premium. These riders provide coverage against specific risks that may not be included in your regular life insurance policy. 

For example, if you work in a high-risk environment like mines or oil rigs, purchasing an accidental death rider is advisable. This will help your family get additional compensation along with the basic sum assured if something untoward happens to you. 

You can purchase as many riders as you want, but you must be prudent with your choice as for every rider you choose, the premium will increase. So, identify the risk so that you can select the right add-on to suit your needs and budget. 

Final Word

A life insurance policy for a family is a necessity. It gives you the assurance that your family members remain protected always and they never face financial hassles even in your absence.