Looking to buy life insurance cover, there are few critical variables which might help you narrow down on the best choice. Here is a list of factors you should look for while searching for a life insurance policy.
- Claim Settlement Ratio
It is the percentage of claims granted out of the total filed in the year. A higher ratio is better as it means claims are settled faster and easier.
- Solvency Ratio
It is the financial strength of the insurer and indicates whether the insurer will be able to settle your claim as and when it arises. Again, a higher ratio is better. But it should be looked at in combination with the claim settlement ratio.
- Maximum Tenure Available
The number of years you can take the plan. It is best to opt for a plan with a higher number of years or at least one which lasts till you reach retirement.
- Additional Covers Available
Life is not the only risk, when it comes to the financial security of your family, disability, accident, critical illnesses, etc. can also have a crippling effect on your finances unless you are prepared. Availability of these covers as add-ons to your life policy will make it easier to manage all the risks with one single annual premium.
- Life-Stage Increments to Insurance
With age, you family responsibilities increase. A plan which allows you to increase your life cover as your responsibilities increase will be a clear choice if you expect the same.
- Premium Cost
Though cost is an important factor this should be looked at the last, once you have ascertained all the other benefits are also available. Most of the time, the cost is determined by the number of benefits available, and thus, the slightly higher price for everything you need may not be a constraint.
A Case of Selecting Life Insurance Policy
Sameer, 35 years of age, is married to Shweta and together they look after their two kids. While Sameer is the primary breadwinner of the family Shweta makes sure that every penny he earns is put to good use. With the increase in responsibilities, he had been contemplating increasing his Life Insurance cover to ensure that his family remains financially independent even if he is not there to earn for it.
He has been considering multiple options available and has narrowed down to the three brands, offering similar benefits. Going further he looks at the factors mentioned above, and this is what he has found:
* Annual premium for a sum assured of Rs. 1 Crore for 35 yr. old male.
On the all factor comparison Brand 2 comes out to be an all-out winner for the following three reasons:
- Best Claim Settlement Ratio
- Better Solvency Ratio Despite Good Claim Settlement
- Most Number of Critical Illnesses covered
Although the premium charged by the Brand 2 product is higher than the two other brands, the benefits far outweigh the additional cost. This is after accounting for the unwanted feature of Life-stage increment, which is not required by Sameer.
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