8 Things to Consider Before Buying a Life Insurance Policy

1. Understanding the purpose of buying an insurance policy

Before comparing policies, ask yourself first: ** Why do I need life insurance?**
In our previous article we discussed how insurance can save us from financial crisis , save income tax as well as become a source of funds after we retire. Despite knowing that insurance has so many advantages, buying life insurance in Nepal is often misunderstood, delayed for too long or done too quickly..

Buying life insurance in Nepal is often confusing. Most people:
Rely only on agents
Don’t fully understand policy features
End up underinsured or overpaying

However, in reality, a life insurance policy is a long-term financial commitment. The right choice can protect your family while the wrong one can feel like a burden for years.
☑️Understanding your goal and purpose before making your decision to buy a life insurance is important

2. Understand the Type of Policy You’re Buying

Once you decide the goal and purpose of buying an insurance policy, now you must choose the type of policy that fits your personal goal. Not all life insurance policies work the same way, and this is where many buyers get confused. Some policies are purely for protection, while others combine insurance with savings or investment.
For example, term insurance focuses on high coverage at a lower cost, while endowment policies provide returns along with protection. There are also whole life policies that provide you a combined benefit of moneyback as well as protection for a whole life.
**☑️Before you commit, understand how your chosen policy actually works over time. **

3. Check Eligibility and Basic Requirements

Another detail that often gets overlooked is eligibility. Eligibility is a very important criteria as it determines whether you can buy a policy and also successfully claim its benefits later. Every insurance policy comes with certain criteria—such as age limits, income requirements, health or medical checks. If you do not meet these requirements, your application may be rejected. Your claim may also be rejected in the future if eligibility was not met or disclosed entirely.
Eligibility also affects your-
Sum assured
Premium you pay
Policy terms and benefits
We will discuss the above listed factors in a while…
☑️ Just remember, checking eligibility ensures that your policy is valid, affordable, and reliable.

4. Make Sure the Coverage (Sum Assured) Is Actually Enough

After you have decided the type of policy you want to buy and fulfilled all the eligibility requirements to enter the policy, the first factor to consider is the coverage of the insurance policy. In other words, it is also known as the Sum Assured, which is the fixed amount of money that the insurance company guarantees to pay to the nominee (or policyholder) if the insured event occurs.
One of the most common mistakes insured people make in Nepal is that they choose policies with low coverage. Have you ever wondered why? Well, the major reason is it helps to keep premiums affordable. While that may feel comfortable today, it may not be enough when your family actually needs it. First ask yourself, “If I am not around, will the sum assured be enough to cover household expenses, loans and future goals of my family?” A practical recommendation that an insurance company provides is that your coverage must be 10-15 times your annual income.
☑️It’s not about buying the cheapest policy—it’s about buying the right level of protection.

5. Evaluate the premium affordability (Long-term)

Choosing a sum assured is only half the decision, as selecting the premium amount with which you can sustain it is equally important. A big amount of sum assured may look attractive, but if the premium goes out of your budget, you might a. Risk missing the payments, and b. You might lose out on policy benefits. On the other hand, a low premium amount may feel easy today, but 10, 20 or even 30 years down the line, the sum assured you receive may make your family underprotected.
Hence, you need to select a premium that comfortably fits into your monthly or yearly budget. The general recommendation is that the premium you pay every year must be at least 10% of your annual income
☑️Balance is the key. Pick a sum assured that adequately protects your family, and a premium that fits into your long-term financial plan.

6. Think About the Policy Tenure Carefully

Life insurance is not something you buy for one or two years; it's a long-term financial commitment that spans decades. That’s why choosing the right tenure is important. Ideally, your policy term should align with your responsibilities, such as until your children are financially independent or your major loans are paid off. At the same time, you should be confident that you can continue paying the premium throughout the duration.
☑️Exiting early in a policy can reduce benefits and lead to losses. So choose a tenure that is comfortable for you.

7. Understand Policy Terms, Conditions, Additions and Exclusions

Once you decide the coverage, premium and tenure, it is also important to look into the details of an insurance policy. This is where many buyers make mistakes—they don’t read the details.
Particularly, pay attention to:
Waiting periods - The time you must wait after buying a policy before certain benefits become active.
Exclusions (suicide clause, pre-existing conditions, etc.) - Specific situations or conditions where the insurer will not pay a claim.
Lock-in period - The minimum time you must keep the policy before you can withdraw or exit without penalties.
Surrender value rules – The conditions under which you can cancel the policy early and receive a certain amount of premium back.
Most insurers in Nepal also offer optional riders (benefits) such as accidental death benefit, critical illness rider, disability benefit and premium waiver benefit, among others, that can strengthen your coverage. We will understand more about these terms/benefits in our upcoming articles.
☑️The right way to approach this is to compare benefits and exclusions of different plans and choose the right one.
This brings us to our last and a very valuable step – smart comparison – it will definitely save you from overpaying or choosing the wrong plan!

8. Compare Features Instead of Rushing the Decision

Finally, buying a life insurance policy doesn’t have to be confusing or overwhelming. Most people regret not comparing insurance before buying. So, with clear purpose, the right information and a little comparison, you can definitely choose a policy that fits your life goals.
Visiting multiple websites or relying entirely on agents can be exhausting. You can explore and compare different life insurance options here in one place through Sajilobima. It allows you to look at coverage, premiums, tenure, and benefits side-by-side, making the decision much clearer.
6 reasons to choose us. We help:
1. Access unbiased information
2. Compare policies side by side
3. Find a policy tailored to your needs
4. Choose plans that fit your budget
5. Get detailed breakdown of benefits & premiums
6. Safe and scam free platform
7. Expert assistance available if you want
Life insurance is not about buying quickly—it’s about buying wisely. Investing a little extra time before making a decision can make your family’s future more secure.
☑️Visit Sajilobima.com and compare life insurance plans in Nepal in just a few minutes.