Life insurance is an important aspect of financial planning. It protects your family from any financial loss in the event of the sudden demise of the bread earner and ensures that your dependents continue to live a comfortable life, even when you are not around.

Most people understand the significance of having life insurance and they have no qualms about buying one. But, did you know that when it comes to buying a policy, there are certain points you need to consider before purchasing one? Here are some things you must consider before purchasing a LIC policy:

Type of Policy

There are two main types of life insurance policies – term plans and endowment plans. If you want pure risk cover without any investment element, go for a term plan as it offers high cover at a low cost. On the other hand, if you want to invest in a plan that offers protection against risks along with maturity benefits, an endowment plan is ideal for you. However, remember that endowment plans do not offer adequate cover as compared to term plans.

Premium Payments

The amount of premium paid by you is based on your age, gender, health condition, and other factors like whether you smoke or not. At the time when you purchase an insurance policy, it is important for you to determine how much premium can you afford on a monthly basis without affecting your monthly budget.

Your Age and Health

Insurance companies are in the business of assessing risk, and they will charge you more for your life insurance if they feel there is a higher risk of you dying while you have coverage with them. You may be surprised to find out that this includes your age and general health. For example, if you are 30 years old, expect to pay less than if you were 60 years old because an older person has a higher risk of death than someone younger.


The reason why you want insurance is important. Do you want it because everyone has insurance? Or do you want to provide financial security to your family in case of any eventuality? The reason for buying insurance helps you determine the kind of insurance you need. For example, if it is for providing financial security, then term plans would be most suitable.

Return on investment (ROI)

If you have a family who is dependent on you and your income, then it is essential that you buy a term life insurance plan at an early age. This way it will cost much less than if you were to buy it in your later years. The premium rates will be lesser and lower as compared to later years where they would be much higher. Compare different plans online and consider the benefits you get from each one of them before buying one.