5 smart ways to get more value from your life insurance policy

August 7, 2020 6:08 PM

Unravel the major factors that affect how much you pay towards your policy and minimize those costs smartly in 5 simple ways.

 life insurance policy, benefits, smart ways, premium, life cover,It is prudent to invest in life insurance earlier in life, to reap in the larger benefits during the later stages of one’s living.

By Aalok Bhan

Life insurance is among the most comprehensive and fundamental forms of financial support that one can depend upon to protect loved ones from future uncertainties. It offers the family much needed financial succor to get on with life in the case of adversity and helps secure their future. Despite this, many forgo this security for various reasons – the perceived cost of a policy being one of them.

Most people often overestimate the cost of life insurance, when it is much more affordable than we think. Unravel the major factors that affect how much you pay towards your policy and minimize those costs smartly in 5 simple ways.

1) Buy young as premiums escalate with age

“Fun is like life insurance, the older you get the more it costs.” This quote by famous American cartoonist Frank McKinney couldn’t be truer. Age is among the biggest factors that determine the cost of your life insurance policy. This is for a simple reason – with every passing year, you get closer to mortality and therefore life insurance becomes more expensive as you grow older.

Life insurance premiums are typically lower when you buy as a young adult in your 20s or early 30s as compared to when you’re older. Hence prudent is to invest in life insurance earlier in life, to reap in the larger benefits during the later stages of one’s living.

2) Lead a healthy lifestyle

When underwriting a policy, life insurers pay distinct attention to your medical history because a person who is in excellent health is considered less likely to fall prey to life-threatening ailments than someone in poor health. An example in point being that premiums for smokers can sometimes be 10 times the premium for non-smokers.

Simply put, the healthier you are, the lesser premiums you’ll pay. To reinforce fitness, many health and life insurance companies today even offer discounts based on positive health alterations you make such as physical exercises, running, swimming, and leading a healthy lifestyle in general.

3) Make sum assured not premiums your criteria to buy life insurance

If you are ready to buy life insurance, it is important to make sure that the future of your loved ones is secured with the right amount of sum assured. The insurance cover that the nominee(s) will receive in the case of the unfortunate demise of the bread earner is the sum assured that the life insurer commits to the insured. This cover ensures that one’s family continues to lead a comfortable lifestyle, in line with the current lifestyle even after the unfortunate demise of the bread earner of the family.

Many times, the loss of the primary bread earner leads to a financial void which weakens the current lifestyle and forces the family to turn towards restrained means of living. In this parlance, you should consider buying term plans that offer considerable sum assured at lower premiums, which make them much more value-driven and help cover the protection needs you are looking for.

4) Consider paying premiums annually

Paying your premium annually will automatically come cheaper as your insurer may offer you a discounted rate for paying premiums annually over monthly payments. Taking into account individual income and budget, paying premiums annually may not always be possible, but will allow you to get a discount overall, and will also offer convenience for not having to worry about premium payments all of the remaining year.

5) Review your life insurance needs at regular intervals

True financial prudence lies in being able to review one’s life policies and sum assured requirements at regular intervals. With changing life goals, the need to review the right sum assured remains paramount, where one should have a broader outlook towards personal needs and decide on the financial security that is required.

For example, a person having young children needs to look at a larger sum assured cover, than someone who is nearing retirement and has children who are self-reliant. This shift in life stages requires one to align their sum assured needs to prudently invest for the future.

When it comes to a life insurance policy, whether it’s a term plan, savings plan, or any other, you can only feel completely protected when you not just own a policy but are also aware of the various benefits of your policy to the best effect. So go out and do your deep-dive into the world of life insurance and get the best policy that offers affordable and correct sum assured for securing your family’s future.

(The author is Director & Chief Marketing Officer, Max Life Insurance)

Do you know What is ? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1COVID-19 protection cover of Bajaj Finserv – Check premium, benefits
2Irdai plans to come out with standard plans to boost insurance penetration
3Irdai to take decision on extending tenure of COVID-19 related products: Chairman