With mounting stress in our everyday life, the overall life span of a man is decreasing. From a very young age, people are facing troublesome mental and physical health issues. Therefore, to make sure that any accident does not affect your family’s quality of life, you should consider investing in a suitable insurance plan. These also hold importance in one’s life as no one knows what the future holds. In case you are the only breadwinner in your family, without insurance your family members may face devastating consequences without you.
Whenever we think of buying an insurance policy, LIC is the first organisation that comes in our mind. In every Indian household, making a LIC policy is referred to as security. However, there are many policies to choose from. You should opt for a LIC policy that suits your requirements. Going through the article will help you to find the best LIC policy that suits your requirements.
Things to consider before opting for a LIC policy
Investing in insurance is among the most essential financial decisions of our life, yet only a few people consider buying insurance. When we are young, we may invest in many different things like fine dining, expensive garments, holidays, thereby, constantly ignoring the need of getting insurance. But, if you have a family then, you can use insurance as a tool to secure your family’s financial needs, in case something unexpected happens. Here are some significant factors to consider before investing in the best LIC policy.
Determine the purpose
While investing in a plan, you should have a clear purpose so that your investment plan fulfils your financial needs. Having term insurance is a must when you want to satisfy income replacement. Likewise, it is better to opt for a pension plan to plan your retirement. Thus, the choice of your term plan must complement your financial goals.
Assure the sum of the policy
The sum of your term policy should be enough to cover your future financial goals. For instance, if your financial goal is to cover your children’s educational costs, then you can invest in a LIC policy that will pay your children the maturity benefit after your children attain twenty years of age.
The type of plan
The plan you choose to invest in should depend on your risk appetite as well. If you are willing to take the risk to avail better benefits then, consider investing in ULIPs. Otherwise, traditional money-back plans or endowment plans are best for guaranteed returns.
Enjoy tax benefits
Life insurance policies are tax exempted as per Indian tax laws, section 80C. For the premium paid, you can enjoy tax exemption up to Rs 1.5 Lakhs. Further, the tax benefit received from death or maturity funds is also tax exempted under section 10D. Don’t forget to maximize your tax benefits with the term insurance plan you choose.
The policy of the term
You should select the policy of the term based on your financial requirements. Consider your investment horizon, the tenure of the term and choose your insurance policy wisely. For example, you may need funds after 15 years, then opt for a policy term of 15 years to get the benefit of investment, when you need it.
Additional coverage
Consult your LIC agent if optional riders are offered with your insurance plan to increase the capacity of your coverage. Suppose, if you have invested in basic term insurance then you can purchase add-ons including accidental disability coverage, critical illness coverage etc. to save yourself from unexpected circumstances.
Suitable Pay-outs
LIC pension plan offers several annuity options. While investing in a pension plan, make sure that you choose a payout option that suits your requirements. You should consider the annuity time while you can get maximum benefits out of your investment.
Bonus and loyalty addition
Some of the traditional investment plans provide you with extra additions such as guaranteed additions, loyalty additions and reversionary bonuses. To get higher payout under a LIC policy, look for these additional benefits before choosing a LIC policy.
Exclusion conditions
Almost every policy returns the surrendered amount if you fail to continue the investment policy. However, the surrendered amount will be returned only when such things happen within twelve months. Hence, check your exclusion plan before investing in a LIC policy.
Insurance plan is a great instrument to protect you from unexpected occurrences, handle emergencies and accidents. The need for LIC policy changes at every stage of your life based on your financial obligations. One should plan their financial goals and then opt for a LIC policy to avail a term plan that suits your requirements. Be cautious while choosing a LIC policy because it not only involves you but also your loved one’s financial security.