Tips to Compare Life Insurance Plans

by SMCIB on Wednesday, 05 April 2023

Tips to Compare Life Insurance Plans

Life insurance comes in various shapes and sizes to suit your unique needs. With a wide variety of options available in the market,
you may find it challenging to choose a plan that would be appropriate for you and your family.

So, how do you pick your ideal policy that is tailored to your needs and requirements?

Comparing policies is the best approach to exploring options that may otherwise not be familiar to you. You can compare life insurance policies based on various parameters like their premium, coverage they provide, features, additional benefits, etc. to get the best plan that is worth your effort and money. Not only does it help you to narrow down your choices, but also helps you make an informed decision.

In this article, we will discuss some valuable tips to compare life insurance plans. Let’s begin.

What is Life Insurance?
Life insurance is a legal agreement between you and the insurance company wherein the insurer provides you with coverage and other benefits in exchange for premiums. In case of your unfortunate death, the insurance company pays your loved ones a fixed sum of money called a ‘sum assured’ or death benefit.

The person covered under the plan is called the ‘insured’ or ‘life insured’. The fee you pay to keep the policy active is the ‘premium’. The amount that your insurance company will pay to your loved ones in the event of your untimely demise is the ‘cover amount’. The person who receives the sum assured or the monetary benefit from the insurance company is the nominee/beneficiary.

Why Should You Compare Life Insurance?
A healthy comparison of things always gives you the best results. We compare any product we buy, whether it’s biscuits, toothpaste, cars, phones, etc. So, why not an investment tool like life insurance?
As mentioned earlier, if you plan to buy a life insurance policy from a pool of choices, you should compare them based on various parameters such as their features, coverage, premium, etc. Comparing life insurance policies online can help you -

?Get A Premium That Fits Your Budget
The premium is the amount that you pay to your insurer to keep your policy and coverage active. Since the premium amount of various life insurance plans widely vary, comparing plans will help you choose a plan that is pocket-friendly and gives you adequate coverage to fulfil your long-term goals (settling debts, funding children’s higher education, wedding expenses) and short-term goals (daily expenses, EMIs, other monthly bills, etc.) easily.

?Find a Trustworthy Insurance Company
Comparing plans also ensures that you choose a company that is reliable, financially stable, and can effectively settle your claim - in the hour of need.  You can easily do it by comparing the customer reviews. By reading the reviews, you can get a better idea about the company’s quality and efficiency.

?Explore Various Options in the Market
Comparing life insurance policies is a way to explore a variety of options available in the market. Since there are varied options, you have a high chance of finding an ideal policy that can best fit your needs and requirements.

Tips to Compare Life Insurance Plans

Here are some things to keep in mind when you compare life insurance plans -

1️⃣ Firstly, understand your needs
Every individual’s needs and requirements are different. So, to make a healthy comparison of various life insurance plans, it is essential to understand your requirements thoroughly. If you have a number of financial obligations to settle such as higher education for your children, their marriage, meeting daily expenses, saving for retirement, etc, you need to find the right plan that will ensure that all these needs are met.

So, to choose the best plan, you need to analyse your financial situation, consider your age, consider the number of people dependent on you financially, etc. Analysing these factors will help you identify the type of plan you need to fulfil your goals in life.

2️⃣ Look at the cover amount
The cover amount is the sum of money that your nominee receives in case of your sudden demise during the policy term. If you survive the policy term, it is directly paid to you in case the policy you choose pays out a maturity benefit. So, always choose a cover amount that will be adequate to fulfil your and your family’s requirements. 

For instance, Raman is the sole breadwinner of his family. He has a wife and a son who are financially dependent on him. He wants to accumulate enough funds for his son’s higher education and also wants to leave a legacy for his family. He calculates the cover amount keeping his goals in mind and finds that he needs around Rs 1 Crore for the same. So, he compared life insurance policies online and found that whole life insurance would be the best financial plan to accommodate his goals. So he purchases whole life insurance with a sum assured of Rs 1 Crore. 

3️⃣ Compare the payable premiums
The premium amount is the most important aspect to consider when it comes to a life insurance plan. It is the amount that you pay to your insurance company to receive coverage. You will find numerous plans that offer the same coverage at different premium rates. Moreover, some plans might come with some extra charges. So, comparing plans allows you to explore plans that offer affordable premium rates that easily fit into your budget, and provide adequate coverage.

4️⃣ Keep an eye on the discounts
Numerous insurance companies offer various discounts to their customers in the form of lower premium rates. For instance, if you are a non-smoker and live a healthy lifestyle, you might get the benefit of paying reasonable premiums. So, before purchasing a life insurance plan, check if the insurance company offers such benefits/discounts and whether you qualify for the same or not.

5️⃣ Go through the features and benefits of the policies
Different life insurance plans offer different features and benefits. Some plans allow you to add riders to your policy to get extended coverage. Riders are the add-ons that can be availed of by paying an extra cost. For instance, you can add an accidental death benefit rider, critical illness rider, waiver of premium rider, etc. to increase your policy coverage. Some also offer you additional features like increasing cover, joint life option, etc.

Comparing the policies will allow you to find the plan that offers maximum features and benefits at a reasonable cost. However, ensure you evaluate your needs and requirements before you opt for these additional features.

6️⃣ Read all the policy terms and conditions
The terms and conditions enclose all the requirements of a policy. It also helps you to understand what it covers and excludes. So, while purchasing a policy for yourself, it is crucial to read them carefully - so you know what you are agreeing to.

7️⃣ Have a look at the claim settlement ratio
The Claim Settlement Ratio refers to the number of claims settled by a particular insurance company out of the total claims received by it in a year. It shows the reliability and effectiveness of a company to settle claims in times of need. In short, it is an indicator of a company’s credibility. So, always check the CSRs of different companies. Remember, the higher the ratio, the greater the chance of your claim getting settled in the future.

8️⃣ Analyze the reviews of the insurance company
Lastly, have a look at the reviews of the various insurance companies. It gives you an idea of how reliable a company is in terms of its services. A company with favourable reviews ensures that you or your loved ones will have a hassle-free and smoother insurance journey, right from purchase to query-solving to claims.

Life insurance is a great way to safeguard the financial security of you and your loved ones. Since it is a long-term investment, it is crucial to conduct thorough research and compare plans before making a final decision. By doing so, you can ensure that you get your desired coverage at a premium that fits your budget. You will be able to invest in a plan that best suits your needs and budget.



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