Protection plans are low-cost insurance plans that provide full protection and financial stability to your family in case of any unforeseen events. Before choosing any insurance plan, you need to carefully assess your needs and requirements. Here are 5 simple steps will help you take the right decision.

Step 1: Identify goals

The first thing you need to do is identify your goals for buying an insurance plan; are you buying insurance only for life cover or are you also looking for an investment option?  For example, if you are looking for risk coverage plus stable returns, then an endowment plan is what you can avail. Another factor you need to consider is time. Short term financial goals like saving for a car, down payment for a home, or minor home improvements differ from long term goals like saving for child’s higher education or retirement. So depending on your goals, you can choose the plan best suited for you.

Step 2: Get the right advice

Getting the right advice and guidance at the right time is very important.  Once you have chalked down your financial goals, engage with an insurance advisor or investment professional to know the best options available for you.  Talk with an advisor who can understand your personal needs and guide you towards the right plans.

Step 3: Identify life cover

As life coverage is the basic purpose of life insurance, getting adequate cover should be a priority. Compute the life cover figure with your advisor taking into account your goals, inflation, time horizon, etc. Choose the right plan depending on your risk appetite, time horizon etc. You need to consider the level of risk you are prepared to bear and for how long.  Getting adequate risk coverage will ensure that your dependants have sufficient amount of income even in your absence.

Step 4: Compare

The market is filled with insurance companies selling a variety of insurance plans. So even if you have your particular goal written in front of you, given the abundance of options available, you will still be confused about which plan to buy. The only way out of this is to compare. Always compare from among the various plans available and choose the right one.

Step 5: Understand

Once you have decided on a policy, make sure you understand what you are buying. Things that you need to know include how often the premiums are due, what part of the premiums or benefits is not guaranteed, etc. Read the terms and conditions of the policy carefully and finalize only when you are clear about them. Please consult your insurance advisor, in case you are unclear about anything.

Life insurance is a must for financial stability. So if you are not already covered by insurance and are confused about where to start, follow these five steps and ensure that you get the right protection.