What to Consider When Buying Individual Life Insurance

Time seems to freeze when a loved one develops a serious illness and it’s normal to go through a tough emotional phase akin to grieving. But when death occurs in a family especially that of a breadwinner, there are severe financial implications and hardships in addition to the emotional trauma of losing someone. 

Individual Life Insurance Products Can Help in Your Worst Hour

According to data published by India Brand Equity Foundation, India’s life insurance sector is the biggest in the world, with about 360 million policies. Moreover, this is expected to expand at a phenomenal compounded annual growth rate (CAGR) of 12-15% over the next five years.

A life insurance policy is designed to ease life's uncertainties and difficulties. Such policy is a legal agreement between you and an insurance company that guarantees the payment of a death benefit to your chosen beneficiaries in exchange for the payment of premiums by you. The primary aim of a life insurance policy is to protect the surviving members of a family or other dependents against the loss of an individual’s income or services. To decide how much coverage is required, think about your family’s situation and how much would be required in your absence. 

Identify Your Family's Needs

When buying individual life insurance products, you need to arrive at an amount of money that you wish to be paid at the time of your demise. You would also need to name the person or persons, known as your “beneficiaries”, who would receive that money. You may also have the right to determine whether that money will be paid in a lump-sum or in a series of payments.

If you are married, you will want enough coverage to minimize your spouse’s financial needs as well as plan for your children’s future expenses, including college tuition and marriage.

Consider your annual living expenses as well as any mortgage on your home, personal or car loans, or property taxes. In such cases, you will need more cover than someone whose mortgages are fully paid off. If you do not want that your dependents to pay for your final expenses, such as hospital bills and costs associated with the last rites, ensure enough coverage beforehand.

Choosing a Company

Make sure that the insurer you are dealing with is a reputable one that will be around to protect your loved ones financially when the need arises. One important factor to consider in choosing an insurer is its financial strength. Make sure the company recognizes your financial needs and goals, and is committed to helping you meet them, by offering a wide range of life insurance plans, financial solutions and riders. 

Riders Available

Insurance companies offer riders with specific benefits, such as additional coverage against accident or disability. Riders need to be purchased separately from the basic policy. A number of riders are offered by life insurance companies, which add value to a policy. The common riders are:

• Family Income Benefit Rider: This traditional rider provides financial protection to your family in the event of your unfortunate demise. It protects the family against financial liabilities after the demise of the policyholder.

• Accidental Death and Total & Permanent Disability Benefit Rider: Accidents are common nowadays, and can impair an individual’s life and cause his death, affecting the family both emotionally and financially. This rider provides additional benefits to the insured in such an unfortunate event.

It is important for you to get only that much life insurance as you can afford to pay for in terms of premium. Opting for a life insurance products and then losing it because of your inability to pay the premiums would not be a great outcome.