The second wave of the Coronavirus pandemic has been wreaking havoc across the country. The number of daily reported cases hit a record high of over four lakh infections during the first week of May. This took the total number of infections until now to around 22 million, second only to the US. Meanwhile, almost 2.5 lakh people have died in the country due to the deadly virus, many of them being the breadwinners of the family. If this does not highlight the importance of having a sound life insurance policy to protect your family in your absence, nothing will. It is best advised to buy term life insurance at the earliest since if you get infected with Covid-19, insurers may implement certain terms and conditions on purchase of term plan.

There have been so many families that have been left to fend for themselves due to the loss of the sole income-earning member of the family. A life insurance policy in such situations can come to the rescue as it can help pay for the life goals of the family. However, just having a life insurance plan is not enough. There are many things to consider ensuring that if something unfortunate happens to you, your family is taken care of financially.

Here are a few steps that will let you pick the best life insurance plan against Coronavirus:

Choosing the right sum assured

The core idea behind buying life insurance is that if something unfortunate happens to the policyholder, their family can continue leading a comfortable life. That is possible only if the payout under the insurance policy is enough to compensate for the lost income due to the death of the policyholder. In case the sum assured is not carefully evaluated based on the future needs of the family, the insurance proceeds may exhaust sooner than you know. Choosing a lower sum assured is a common mistake among Indians and data shows that an average Indian policyholder’s life insurance coverage would meet only 8 per cent of expenses of the family following the death of the earning member. Ideally, the sum assured should be at least 15 times the policyholder’s annual income, if not more.

Choosing the right policy tenure

It may be true that your immediate motivation behind buying a life insurance policy is the Coronavirus pandemic and the fear of not being able to take care of your family if you fall prey to the deadly virus. However, you must remember that in the uncertain world that we live in, tragedy can strike at any time. However, the financial benefit of the term plan is applicable only if the death of the policyholder occurs during the policy term. In case he or she survives that term, there is usually no maturity benefit. Therefore, you must look beyond the pandemic and go for a plan that covers you for a long time to come. Since a higher term period would cover you till a longer age, this would also increase the chances of the plan benefits being paid.

Choosing the right payout option

A life insurance policy comes with two options in terms of the payout of death benefit to the policyholder’s nominee — lump sum and monthly payout. In case of the lump sum payment, the dependents of the deceased would receive the entire sum assured as a one-time payment if the policyholder dies within the policy term. They can then decide how to use that money. On the other hand, you can also choose staggered payout option, under which your nominee receives the sum assured in monthly instalments, which can run for a period of 15-20 years, thereby ensuring

regular income for your family. You can choose the monthly payout option if your family is not financially well informed and if you feel they may not be able to manage a large sum paid as a lump sum payment. Instead of monthly payments, you can also choose any other periodicity of staggered payments as you may deem fit as per the requirements of your family. There is also an option to choose a mix of both alternatives wherein a part of the sum assured is paid immediately at the death of the policyholder and the remaining amount is paid in periodic instalments.

Choose the right insurer

Say one does all their homework and buy a sound life insurance policy, but when their nominees make the claim, they have to run from pillar to post to get the money that is due to them. Or worse, their claim is rejected unfairly. This is why you must buy the policy from a reliable insurer. You should not only look at the premium the insurer is offering you, but also the claim settlement record of the insurance provider. This would give you a fair idea if your family would get the sum assured without any trouble.

Choose add-ons as per your needs

When you buy a life insurance policy, you can also choose some extra benefits on top of the base policy, which are called “riders” or “add-ons”. You can choose from add-ons for critical illnesses, accidental death or disability, waiver of premium and so on. A critical illness rider pays out a lump sum amount if the policyholder is diagnosed with any of the listed critical illnesses, while an accidental death or disability rider does the same if the policyholder loses his or her life, or is left totally or partially disabled, due to an accident. In case of a waiver of premium rider, all future premium payments are waived if the policyholder can no longer make them due to certain events like critical illness or permanent total disability due to an accident. Meanwhile, the policy continues uninterrupted until the end of the policy term.

Buy insurance plans online

When you buy your life insurance policy online, you get the option to compare plans offered by different insurers right from the comfort of your home. This can help you zero in on the right plan for yourself while also ensuring you get the best deal.

There is no doubt that the Coronavirus pandemic has served as a wake-up call for those who either have not considered taking a life insurance plan or have been postponing it. Although Covid-19 is a newly discovered ailment, the good news is that it is covered by most life insurance policies. In this uncertain world, it is crucial to buy a life insurance policy and include it in your investment portfolio. Make sure to read the policy document to understand the extent of coverage against Covid-19 virus.

The writer is the Head of Term Life Insurance, Policybazaar.com

DISCLAIMER: Views expressed are the author's own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.