Tips to choose a Life Insurance product

At present, you have a wide variety of life insurance products to choose from. In such a case, it is important that you select a product that suits your requirements most appropriately. However, the question lies in identifying what suits your requirement best. All it takes is the answers to a few simple questions. Here are a few essential questions that your agent must ask you to help you decide on a most suitable life insurance plan.

What is my financial goal? You need to know the purpose that you

How much am I willing to spend? You also need to evaluate the quantum that you are willing to spend in the form of premium, towards any insurance plan. You must ensure that this decision is taken wisely so that it doesn’t pinch your pocket in the long run.

would like for your insurance plan to serve. Having your insurance need identified will enable you to move on to the next step.

How much am I willing to spend? You also need to evaluate the quan- tum that you are willing to spend in the form of premium, towards any insurance plan. You must ensure that this decision is taken wisely so that it doesn’t pinch your pocket in the long run. How long am I willing to invest? The decision on the investment horizon needs to be taken while evaluating the amount of your premium.

How much risk am I willing to take? Your risk appetite is a crucial determinant of the returns that you can expect on your investment. The basic principle of investment is: higher the risk, higher the return. Hence, knowing your risk appetite is important to decide if you would be comfortable with a unit-linked plan or a traditional plan. Since the tolerance of risk varies for different people, you should consider the following to decide your risk appetite:

Age or stage of life: A person’s younger years permit him/her more risks since there are few dependents, a safe livelihood, and a longer earning life ahead of him/her.

Asset ownership: If one owns a lot of assets and has few liabilities, one can afford to take more risk.

Investment experience: Those with knowledge and prior experience in investing in financial markets understand the long-term impact of shortterm fluctuations in the market, hence, can take more risk.