Calculate the amount of coverage needed
Know the monthly premiums payable
Choose the pay-out options based on how well your nominee manages money
Determine whether you need riders or add-ons
The first major brush with financial decision-making for most of us is while buying a protection plan. A protection plan ensures that the financial goals, long and short-term, are on track in case of absence of the family's breadwinner. It also helps the family of the deceased to remain financially independent. Answers to these questions would help you zero-in on the right protection plan.
This is one of the fundamental questions you need to ask yourself before buying a protection plan. The coverage should be large enough to take care the day-to-day expenses of your family along with covering loans and liabilities.
The thumb rule is to opt for a coverage 20 times of your annual income. Therefore, if your annual income is Rs.10 lakh per annum, you need a coverage of Rs.2 crore.
The premium you need to pay for Life insurance protection plans depends on many factors such as your age, lifestyle habits, and income, among others. The key is to buy a protection plan early in your life. Availing a plan early, when you are young and healthy, ensures lower premiums.
Premiums go up with age and lifestyle habits. A non-smoker will have to pay lesser premiums than a smoker as the insurer covers a greater risk for the latter.
Additional Read: Save Your Wealth With a Health Insurance Plan
Traditional protection plans offer your nominee a lump sum upon your death during the policy term. However, new-age protection plans also offer staggered pay-outs where a certain percentage of the sum assured is paid as a lump sum and the rest is paid on a monthly basis for a fixed number of years.
Both lump sum and staggered pay-outs have their own pros and cons. You can choose the pay-out option based on the money management skills of your nominee.
Riders are add-ons that help you customise your plan. Critical illness, accidental death and disability, waiver of premium, etc. are some of the most common riders available. Riders give you an additional amount on top of the sum assured in the base policy. Riders can be availed by paying a nominal premium.
Protection plans provide a financial cushion to your dependents against uncertainties and unpleasant surprises of life. They are your most trusted ally while taking challenges head-on and realising the major milestones of your life.
Contact Bajaj Finserv to start your protection plan today.