Financial PlanInsurance

Questions You Must Ask before Buying a Life Insurance

Insurance is a common medium of investment during the last quarter of the year, primarily because of the tax benefits it provides. Every individual invests in life insurance, however, the purpose of investment varies from person to person. Some invest primarily to save taxes while others invest to safeguard them against emergencies.

It is important to know the insurance plan before availing of one. Some of the common questions which should be asked while taking a life insurance plan are as follows:

Will the insurance plan transfer the tax benefits to the beneficiary?

It is important to validate at the time of taking a life insurance policy whether the claims or benefits which get transferred to the spouse or the heirs are tax-free or not.

Is the death benefit protected?

There are some basic cash and liquidity questions to be asked when taking an insurance plan. One of the important questions is if the cash value or the claim post death is protected.

In some cases, incorporation of trust is required. Some of these conditions need to be validated when an insurance plan is taken.

What is the time period when the full cash value can be redeemed?

It is important to know the term of the life insurance and when the cash value would be transferred to the beneficiary. Also, it is essential to know the terms and conditions while the cash value gets transferred.

What are the premium payments and can they change with time and need?

Premium is an important aspect of a life insurance policy. It is important to know what amount of premium you are paying and what is the coverage associated with the same. Also, inquire if the amount of premium can be changed if the need arises.

What is the term of the life insurance plan and what are the benefits associated with the same?

When you are taking the policy, the most important question is to understand the term of the policy and when the benefits would be transferred. Term is important as many features of the policy are associated with the it. It is important to know the benefits that would be rendered to the insured during the tenure of the policy.

These are some of the important questions which should be understood before taking the policy. All the terms and conditions should be understood keeping in mind the investment aim.

Vikas Agarwal
the authorVikas Agarwal
Vikas Agarwal is an IIT-Varanasi graduate in Chemical Engineering. He is the Founder and CEO of - an investment advisory website. He is a Business Development Professional but a Value Investor at heart. He writes articles on Finaacle, which focus on simplifying the art of investing and the causes of human misjudgment when it comes to investing. He also shares his experiences as an investor and lessons from some of the greatest investors of all time.

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