Things To Keep In Mind Before Buying Life Insurance | Credit Help India


A life insurance policy is essentially an arrangement between you and your insurance company that states that your family will be financially secure in the event of your untimely death and loss of earnings. You must pay a fee to the insurance agent on a regular basis for a fixed period of time in order to obtain this financial protection.

Keep these 5 things in mind as you go about your life insurance buying decision:

  • (1) Buy for the Right Reason: Understand why you're buying insurance in the first place. Keep in mind that you're purchasing insurance to help you prepare for specific objectives, protect your health, and ensure the financial security of your dependents. Do not purchase policies solely for the purpose of saving money on taxes.
  • (2)Amount of Life Cover: The premium is calculated based on the amount of life insurance you want. As a general rule, you should have at least 10 times your annual salary in life insurance.
  • (3)Policy Tenure: Your Life Insurance Policy should have a term equal to your ‘Retirement Age minus your Current Age.' This means that if you're 35 years old and want to retire by 65, you should have a policy that lasts at least 30 years.
  • (4)Additional Coverage & Benefits: Serious illness rider, sudden death benefit rider, waiver of premium rider, disability rider, and so on are examples of add-ons that can be purchased in addition to the base coverage. There are valuable extras that can be obtained by paying a small fee.
  • (5)Credentials of the Life Insurance Company & its Claims Experience: It's important to check the credentials of the life insurance policy you're seeking before purchasing a policy.
    • The number of premiums received by an insurance provider for every 100 claims filed is referred to as the Claims Settlement Ratio. In FY19-20, Max Life charged 99.22% of individual death claims (Src. As per Audited Financials FY 19-20).
    • The current market value of the funds held by the financial services firm is referred to as Assets Under Management (AUM). A higher AUM indicates a good and well-performing portfolio.
    • The Solvency Ratio is a metric for determining a company's financial stability. It represents the firm's ability to pay off long-term debts. A higher solvency ratio indicates that a firm is well-positioned to pay claims. Max Life's solvency ratio is 207 percent, which is more than 1.38 times the required 150 percent and reflects our solid and secure financial position.


Life is unpredictable, and if you are the family's sole breadwinner, your untimely death could place your family in serious financial trouble. Life insurance provides you with the assurance that your family will be financially supported in the event of your untimely death. Purchasing a Life Insurance policy serves as a financial cushion to meet your family's financial needs, whether they be for school, marriage, or simply living expenses, even though you are no longer alive.
There is no such thing as a "best time" to obtain adequate coverage, whether you have just started your career, are newly married, or have children. So, go ahead and purchase the life insurance policy you've been debating. It could turn out to be one of your best financial decisions ever.

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