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BW Businessworld

Insure Your Life For A Secure Future

Life insurance is a powerful financial tool with a wealth of benefits for you and your loved ones. It gives you financial security and keeps you worry free from the uncertainties of life. Here are the precautions you must take while purchasing a life insurance plan

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At the beginning of each year we make resolutions; some we keep, some we don’t. Whether you fall in the category of those who keep their resolutions, or otherwise, you will certainly agree that financial planning is something you do to ensure that you have great years ahead.

While planning your finances, life insurance often takes a back seat; even though we know that it is important to take care of contingencies. So how do you go about choosing the right life insurance product for yourself?

Life insurance is a powerful financial tool with a wealth of benefits for you and your loved ones. It gives you financial security and keeps you worry free from the uncertainties of life. Here are the precautions you must take while purchasing a life insurance plan.

Understanding Your Needs
A thorough “need analysis” is very important before buying a life insurance policy. A robust need analysis questionnaire is available on websites of most insurance companies. A need analysis can provide you with a good estimate of your protection needs for contingencies, and the amount that you need to systematically set aside for your goals such as your dream house, retirement, or children’s higher education. Life insurance offers a variety of products; you need to choose one that meets your requirement. Are you willing to take on market risks to earn higher returns? Are you willing to lock your money for medium to long term before you see fruits of your investments?

Penny Wise, Pound Foolish
Another big mistake we often make is, we pick the plan that costs the least. It might seem wise on the face of it, but it can cost you heavily later on when it fails to cover you completely in the hour of need. Hence, investment in life insurance should not be determined by the low premium on offer;but by the coverage you need for the security of your family and yourself, and the safety of the brand that is providing you the security.

What You Need To Know
Before you zero in on a product, it’s critical to understand whether the policy you are purchasing is a market-linked or a capital-guaranteed plan, its renewal premium terms, the lock-in period of the policy, effects of early surrender on value of policy and the amount of life cover offered by it, among other features.

Why Do You Need A Personal Life Insurance Policy
The group life insurance cover provided by your employer may not be enough for you. While basic employer provided life insurance is low-cost or free, and you may be able to buy additional coverage at low rates, your policy’s face value still may not be high enough. It is always advisable to have an insurance coverage that is at least 10 to 12 times your annual salary. Hence, you should evaluate your unique needs and buy additional life cover, if the one provided by your employer isn’t adequate.

Life insurance products may be difficult to understand, and hence it’s advisable to take help from a financial planner while buying an insurance policy. A qualified financial planner will be able to guide you about the products that best suit your individual requirements.

In 2017, you should resolve to take charge of your finances, and secure the future of your loved ones, so that you can celebrate planning and celebrate life.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


Abhijit Gulanikar

The author is Chief Officer - Business Strategy, SBI Life Insurance

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