How to Buy Life Insurance on a Budget?

Expeditious technological advancement and spread of unknown diseases both contribute towards volatility and ambiguity in a global economy. Development of new technologies blow away the need for manual assistance in organizations, which results in opportunity and income loss while new or deadly diseases may end the sole breadwinner’s life.

One of the prudent ways to provide financial assistance to yourself and your family dependents against such unexpected upheavals is to opt for life insurance. Before we explain in detail parameters to factor in to buy life insurance as per your budget, let us define what is life insurance.

What is life insurance?

Life insurance is a contract signed between the insurance company and the insurance holder wherein the insurer promises to pay a predetermined sum to the insured’s dependents upon his demise or after the completion of a set period. The sum assured is paid by the insurer in exchange for a particular premium amount borne by the insured.

As there are different kinds of life insurance options providing financial aid in the form of term life cover, post retirement cover, wealth creation, long term financial goal attainment etc., it is important for you to assess among all the available insurance options to choose the one as per your financial requirement.

How to purchase an appropriate life insurance policy on budget?

In contrast to the popular belief, when you buy life insurance you do not require investing a huge chunk of money upfront. For instance, ULIPs is an insurance plan that combines both life insurance and market linked investment. A part of your insurance premium goes towards insuring your life while the rest is invested in bonds, stocks, market instruments etc. Investment in such insurance plans can be started with usually as less as Rs 3,000 per month to avail long term benefits of numerous bull-runs in market. ULIPs come with a lock-in period of 5 years and qualify for tax deductions as per Section 80C. In case of term insurance, as its premium is based upon the insurer’s age and medical history, purchasing it early can fetch you the insurance at a low premium.

Your insurance premium cost must be viewed as an investment, which allows you and your family a safety net during uncertain events. Hence, you must research in depth to select the correct insurance, which not just would assist you to save on the premium cost but also cater you with sufficient cover.

Here, we will discuss ways on how you can purchase life insurance as per your planned budget:

Purchase it as early as possible

Your age impacts your insurance premium amount directly, i.e. the younger you are, lower is your insurance premium and vice versa. To put it simply, if you buy your insurance at a young age or as early as possible, you will get the policy at lower premiums as compared to if you procrastinate until you get older as there is reduced risk linked with young policy holders. Thus, it is recommended that you buy insurance in your 20s as it saves money on your premium and helps you to avail it within budget.

Follow a healthy lifestyle

For those maintaining a good lifestyle, their premium amount is lower. Insurance companies pay attention to the policyholder’s medical history. Lifestyle linked maladies like hypertension and blood pressure can enhance the premium amount. Thus, it is crucial to follow a healthy lifestyle.

Irony here is when most require life insurance just after they have had a health issue, they are least likely to avail it or may avail it at an extremely high premium. Before providing you with insurance, insurers conduct medical checkups to collect information regarding your medical history. Based on the checkup, insurers either approve or reject your policy request. Thus, ensure to maintain a healthy lifestyle as it reduces the risk of contracting ailments, which helps avail lower premium on insurance.

Use life insurance premium calculator to compare among multiple insurers

Before approving the insurance cover to the insured, insurers check various factors such as the insurer’s age, health condition and income. As the insurance premium is set as per the individual’s risk profile it can vary by a great margin from one customer to another. By using online life insurance premium calculators, insurance seekers can self-check their policy approval prospects as well as determine the suitable insurer as per their budget.

Choose premium payment mode carefully

When buying a life policy, you get the choice to pay premiums in numerous ways – monthly, half yearly or annually. For those who select the monthly premium option, should be careful to pay their premiums monthly as nonpayment can result in termination of the policy.  Also, many insurance companies permit the insured to pay a lump sum premium amount, which gets the holders a good discount on premium. Thus, ensure to compare all the premium payment modes on the platform i.e. monthly, half yearly or annually to choose the one giving you maximum discount.