Deciding to buy life insurance is the initial key step for assuring your family’s financial safety. However, life insurance should not be a burden but an ease and care that you are providing for your family. So choosing the best life insurance company that aligns with your budget is mandatory.
There are numerous life insurance companies in the market offering different policies, features, benefits, and price structures. With so many options available, how to choose the life insurance company that coincides with your budget?
Therefore, to assist you in making a well-informed decision, we have provided some tips that will help you select the best life insurance company that not only meets your needs but also your budget.
12 Tips to Choose the Best Life Insurance Company at Your Budget
- Identify your needs first
The primary step you should take before opting to choose a life insurance company is to identify your needs. What exactly do you need? What coverage should you buy? How much premium you can pay every month?
For this, pinpoint your financial expenses every month, your debts, and your income. So have a comprehensive understanding of your needs and how much you want to spend to not interrupt your budget.
- Understand the type of life insurance you wish to purchase
There are many types of life insurance but there are mainly two categories: term life insurance and whole life insurance. Term life insurance provides you coverage for a specified period such as 10, 20, or 30 years. Whereas, whole life insurance supports you for your entire life. The company will pay your entire claim to your beneficiary after your demise. Term life insurance is affordable with a cheap premium fee.
Whereas whole life insurance premiums can be expensive it includes a cash value component. So understanding different types of insurance will help you know which life insurance you wish to buy that can provide you adequate support aligning with your budget.
- Get the insurance quote
Getting an insurance quote means forming a budget for the life insurance policy you are buying. So decide on a reliable insurance agent or consultant that you can trust and understand what that policy would cover and not cover.
Getting an insurance quote is not such a simple task. Therefore, it is important to have support from an insurance broker you trust in addition to seeking information about the insurance company, such as its history and the company’s credibility in the market.
All this so that the service is provided with excellence, avoiding even more problems when an incident occurs. Check out some tips below when getting an insurance quote:
Search for a reliable insurance company
It is important to analyze insurance companies and research their information and reputation. Although the company may be providing the policy at or under your budget, if it has a negative image in the market, you should look for another one.
Look for a trustworthy insurance agent
Having an insurance agent at the time of the quote is very important. He or she would be a qualified professional and you need his guidance for closing a good deal. He will be able to aid you in the quote process and in finding the life insurance policy that suits your budget. He can help you with price research. Also, he will have access to the best insurance companies in the country.
Understand what insurance coverage covers
One of the precautions when making an insurance quote is to make sure that the coverage meets your needs. On the market, there are basic and more complete coverages. For example, in the case of life insurance, some insurance policies only offer more basic coverage. Such as in the event of death from natural causes or accidents. Others allow additional benefits such as disability due to accidents. To understand which coverage you will be taking.
Check risk factors
When making an insurance quote it is important to check the risk factors. For example, taking out life insurance for those with a history of illnesses in the family can make the contract more expensive.
Check the terms of the contract
Carefully read the contract and its terms to understand what is covered by the insurance and in which situations you can claim it. Re-read the contract if needed, and understand it line by line, word by word. Each clause mentioned in the policy has importance. So pay attention to each point so you can avoid possible future complications with the life insurance company.
Do not hesitate to ask questions
When reading the terms of the policy, if you find it difficult to understand, you can always ask questions and clarify. You can ask the company representative or insurance agent to clear your doubts. Remember you must have full knowledge of the contract.
When renewing, quote in advance
When renewing your contract, get a quote in advance and avoid being left without coverage.
- Find out which company will give you the best value for your money invested
When you are choosing the most suitable life insurance company for your budget, you should consider the cost-benefit of the insurance. It is important to evaluate the value of the premium and the coverage offered by the insurance.
Some insurance companies offer additional coverage, such as funeral assistance and coverage for serious illnesses, for example. Therefore, compare the options available on the market. It is possible to find comparison tables with the main differences of each insurance, such as those available on the Nepal Insurance Authority website.
- Decide on the insurance company that offers personalization
When picking the best life insurance company that offers you a policy at your budget, consider whether the company will personalize your policy or not. Often, when you ask for budget alignment, the insurance provider offers a generic offer that may not meet your needs. Therefore, choose the company that can form the policy for you, and your needs in line with your lifestyle and budget.
- Compare prices of two or more life insurance companies
As said earlier, numerous insurance companies are offering the same services in the market. But the price they offer these services varies. Each company has its own rules to determine your premium rates and insurance amount.
Some may support death benefits at say NPR 1000 per month while others can cover the same benefit for NPR 2000. So it is always important to compare the prices of two or more companies and find out which one is providing you the service at your budget.
- Keep in mind cheap price doesn’t mean good service
Several insurance companies promote life insurance policies at cheap prices. However, when you research that company, you may notice you haven’t heard about that insurance company in the market before. These companies are nothing more than white labels that include limited service. You may also find very low prices from reputable companies, but you should still pay attention to the specifications.
It is important that you find out the characteristics of the policy well.
Specifically, you must pay attention to the limits, the insured capital, the method of payment of compensation, cases where the insurance does not cover, etc.
- Determine the influencing factors in insurance rates
Life insurance companies determine the premium fee depending on several risk factors. Your age, gender, health status, and your lifestyle are some of the determining factors in determining the premium fee.
They will often check your medical records, and some even ask you to do a medical check-up from their referred medical center or doctor. If you are young, the risk of dying untimely or some serious illness is low therefore your premiums will also be low. If you are old, you are at risk of early death or serious illness. Therefore your premium fee will be high.
Similarly, if you are a smoker or alcoholic, then your premium will be higher since you will be at risk of developing lung cancer or cardiovascular diseases. Likewise, the life insurance company will also consider your lifestyle, high cholesterol, and high blood pressure when determining the premium fee.
If you are a woman taking the insurance, your premium fee is likely to be high because often women’s life expectancy is considered to be longer than that of men.
So if you want your life insurance to be affordable, adopt a healthy lifestyle, and quit smoking and alcohol. Do regular exercise, and take out life insurance at a younger age.
- Find out the financial condition of the insurance company
The financial condition of the life insurance company is also one of the indicators you should consider when choosing a life insurance policy in your budget. The company’s authorized capital, information on shareholders, and information on their t managers are some information you should gather.
Also, investigate the financial stability of the company. This stability indicates the company’s ability to accomplish its financial obligations. the company’s capital, accumulated reserves, and funds are the indicators of the company’s stability.
The company should always be able to pay the claims on time. If the company is providing multidisciplinary policies, then it should also be able to pay for each type of claim.
- Find out if insurance companies accept annual premium fee
Generally, most of the insurance companies will allow you to pay your premium fee annually. However, some companies may ask for only monthly premium payments. This is because paying the premium monthly, quarterly, or semi-annually can be expensive because of the charging of so-called mid-year surcharges.
In the long term, these surcharges are real profit eaters. For example, they can amount to 6% if the premium is paid monthly, or 2% if the premium is paid semi-annually. If you pay annually, however, there are no expenses. So opt for those companies that can allow you to pay premiums annually.
- Think before adding riders or tariffs
Adding add-ons or so-called riders can often increase the price of your premium fee. And these extra tariffs can be unnecessary to you. For example, when taking life insurance, if the company asks you to also add disability or occupational accidental coverage. You may have to think, that if you work in a safe administrative environment, the probability of occupational accident is much lower and you may not need it.
So if the insurance company asks you to add extra tariffs, think if you need such additional tariffs. And aren’t these overpriced? In order to better assess this, you should obtain comparison offers for an individual tariff – for example for accident insurance. Then compare this with the premium for life insurance without an additional rate.
- Purchase from those who offer purchasing of online policies
In today’s digital era, you can buy almost all products online. The same goes for life insurance purchasing. Numerous reputed insurance companies offer to purchase life insurance either directly from them or via their respective insurance agents.
Now, they also have added the option: of online purchasing of life insurance. If so, then you should opt for buying life insurance online as it is advantageous for you from a financial point of view.
Online purchasing of life insurance corresponds in every way to the physical way of buying insurance. The guarantees are the same, and the coverage and support will be the same. Also, choosing online life insurance comes from the better rates you can get on insurance products.
Additionally, insurance companies, by selling their products online. They have the opportunity to save on personnel and practice management costs, with savings that are partly passed on to the end customer who takes out the life insurance policy.
Also, online purchase of life insurance comes with various communication channels such as e-mail and telephone contact for all services such as reporting and claims management.
Buying life insurance at an affordable price and well within your budget is the preliminary step of your important life decisions. Although buying life insurance at a cheap affordable price is most important to you it doesn’t mean you compromise on your safety. Most of the time, cheap options can give you limited advantage.
On the other hand, expensive life insurance policies don’t always mean the insurance policy comes with better benefits. Therefore, when choosing a suitable life insurance company for the purchase of life insurance on your budget, be cautious. Follow these tips and select the company wisely.