At a time when the pandemic claimed almost 2.5 lakh lives, an insurance policy is vital
The second wave of the coronavirus pandemic has wreaked havoc across the country. The number of daily reported cases hit a record high of more than four lakh infections in the first week of May. This has brought the total number of infections so far to around 22 million, just behind the United States. Meanwhile, nearly 2.5 lakh people have died in the country from the deadly virus, many of them breadwinners. If that doesn’t highlight the importance of having a good life insurance policy to protect your family while you are away, nothing will. It is best to take out term life insurance at the earliest, because if you are infected with Covid-19, insurers may implement certain terms and conditions when purchasing a term plan.
There have been so many families that have been left to fend for themselves due to the loss of the only family member earning an income. A life insurance policy in such situations can come to the rescue as it can help pay off the family’s life goals. However, having a life insurance plan is not enough. There are a lot of things to consider to ensure that if something unfortunate happens to you, your family is financially supported.
Here are some steps you can take to choose the best coronavirus life insurance plan:
Choose the right sum insured
The basic idea behind buying life insurance is that if something unfortunate happens to the policyholder, their family can continue to lead a comfortable life. This is only possible if the payment under the insurance policy is sufficient to compensate for the loss of income due to the death of the policyholder. In the event that the sum insured is not carefully assessed against the future needs of the family, the insurance proceeds may run out sooner than you think. Choosing a lower sum insured is a common mistake among Indians, and data shows that the life insurance coverage of an average Indian policyholder would only cover 8 percent of family expenses after the death of the winning member. Ideally, the sum insured should be at least 15 times the annual income of the insured, if not more.
Choosing the right police warrant
It may be true that your immediate motivation behind buying a life insurance policy is the coronavirus pandemic and the fear that you won’t be able to take care of your family if you fall prey to the deadly virus. However, you must remember that in the uncertain world we live in, tragedy can strike at any time. However, the financial advantage of the temporary scheme is only applicable if the death of the policyholder occurs during the term of the contract. In the event that he or she survives this term, there is usually no benefit at maturity. Therefore, you need to look beyond the pandemic and go for a plan that has you covered for the long haul. Since a longer term would cover you until a later age, it would also increase the chances of the plan’s benefits being paid.
Choose the right payment option
A life insurance policy has two options in terms of paying the death benefit to the policyholder’s nominee: a lump sum and a monthly payment. In the event of a lump sum payment, the dependents of the deceased would receive the entire sum insured at one time if the policyholder dies during the term of the policy. They can then decide how to use that money. On the other hand, you can also choose the installment payment option, under which your nominee receives the sum insured in monthly installments, which can extend over a period of 15 to 20 years, thus ensuring
regular income for your family. You can choose the monthly payment option if your family is not well informed financially and you think they will not be able to handle a large sum paid as a lump sum payment. Instead of monthly payments, you can also choose any other installment payment schedule that you deem appropriate based on your family’s needs. There is also an option to choose a combination of the two alternatives in which part of the sum insured is paid immediately upon the death of the policyholder and the remaining amount is paid in periodic installments.
Choose the right insurer
Suppose someone does all their homework and buys a good life insurance policy, but when their applicants apply, they have to run from pillar to post to get the money they are owed. Or worse, their request is unfairly rejected. That is why you should buy the policy from a reliable insurer. You should not only be looking at the premium the insurer is offering you, but also the insurer’s claims record. It would give you a fair idea if your family would get the sum insured without any problem.
Choose add-ons according to your needs
When you buy a life insurance policy, you can also choose additional benefits in addition to the base policy, called “endorsements” or “add-ons”. You can choose from options for critical illness, accidental death or disability, waiver of premiums, and more. A critical illness rider pays a lump sum if the policyholder is diagnosed with one of the listed critical illnesses, while an accidental death or disability rider does the same if the policyholder is killed or left totally or partially disabled, due to an accident. In case of waiver of the premium rider, all future premium payments are waived if the policyholder can no longer make them due to certain events such as serious illness or permanent total disability due to an accident. During this time, the policy continues uninterrupted until the end of the policy term.
Buy insurance plans online
When you buy your life insurance policy online, you have the opportunity to compare the plans offered by different insurers from the comfort of your own home. It can help you find the right plan for yourself while also making sure you get the best deal.
There is no doubt that the coronavirus pandemic has served as a wake-up call to those who have not considered or postponed a life insurance plan. Although Covid-19 is a newly discovered disease, the good news is that it is covered by most life insurance policies. In this uncertain world, it is crucial to buy a life insurance policy and include it in your investment portfolio. Be sure to read the policy document to understand the extent of coverage against the Covid-19 virus.
The author is the Chief Term Life Insurance Officer, Policybazaar.com
DISCLAIMER: Opinions expressed are those of the author and Outlook Money does not necessarily endorse them. Outlook Money will not be responsible for any damages caused to any person / organization directly or indirectly.