We spend years working hard to achieve all of our goals and secure the future of our families. However, life can be unpredictable, and you may face certain emergencies without any warnings. Further, even if everything went well, you definitely look forward to retirement years without financial worries. Therefore, it is important to get a life insurance plan with adequate coverage to protect our loved ones and multiple savings and investment avenues to secure our dreams.
What is life insurance cover?
A life insurance plan is an insurance policy that will provide you or your family with financial support after unfortunate events. Holding a life insurance plan with adequate coverage can help you stay at peace. However, it is important to get the correct coverage amount for your insurance plan.
For a one-in-all life cover, you can look at comprehensive plans. Comprehensive life insurance services help you build a corpus for your retirement years through systematic savings and investments and protect your loved ones with a life cover.
To find the right life insurance cover amount, you should consider a few factors which are listed here.
- Your annual income
A crucial factor you must consider during your life insurance purchase is your current yearly income. In the past, the rule of the thumb was to use ten times the yearly earnings for life coverage. However, with the rise in costs now and high inflation, it is advised that you must opt for approximately 20 times your yearly income. The amount you choose based on this rule will assist your loved ones in dealing with the financial obligations and future costs. It will also help them maintain their standard of living when you’re not around anymore.
- Your existing and future financial obligations
As we grow through life, we accumulate certain financial liabilities like home loans, car loans, education loans etc. Therefore, it is important to calculate the exact amount you are obligated to pay before purchasing the insurance plan. Once you have gotten an estimate on the amount, you must include them in your insurance sum assured amount. Then, if you pass away, the sum assured you select handles the debt obligations and does not bring any financial stress to your family. The near-liquid financial assets you choose can also help in meeting these liabilities. Therefore, you can consider the current value of the assets when calculating the required coverage.
- Your financial objectives
Your financial objectives play a crucial role when you’re deciding the insurance coverage for your plan. An insurance plan is supposed to assist your family to maintain their current lifestyle in the event you pass away early. This will include helping your family meet their financial goals like education, career goals, marriage, etc. Such life requirements can be quite expensive, and therefore, you must include them in your insurance coverage amount.
- Your age when purchasing the plan
The age at which you purchase the plan is also essential, as different life stages require different requirements. Therefore, it is important to review your life insurance policy at regular intervals. In addition, reviewing your insurance plan at different ages will help you ensure your family and loved ones get adequate coverage during unfortunate events.
- The amount of time you want the coverage for
When selecting the insurance cover, it is crucial to select the plan tenure carefully. An insurance plan which does not provide coverage after a certain age may not be the best option. It would help if you purchased the plan when you were young and opted for the highest tenure possible. Many insurance companies assist their customers in helping them select the tenure for their plan. For instance, if you opt for the TATA AIA insurance plan, you can use the insurance calculator to understand the plan’s tenure.
Following the factors mentioned above will help you purchase the best possible insurance plan. Apart from the factors mentioned above, it would help if you made sure the plan you chose can assist you during your golden years. This is where opting for the savings plan comes in handy. There are different variants in the savings plan, like money back plan, endowment plans, etc., which offer assured returns on investments.
You can even opt for comprehensive life insurance services. With comprehensive plans, you have the choice of getting your returns as income at regular intervals, which can be beneficial for holding the financial stability of your home.
Finally, make it a point to enhance your life cover with relevant riders, such as accidental death benefit rider, critical illness cover, disability rider and so on.
If you’re planning to purchase a life cover insurance policy, you must ensure the plan you choose provides adequate coverage. To make sure you purchase the best possible plan, you can consider the factors mentioned above. They will help you buy an insurance plan with the most optimal life insurance cover.