Choosing the right life insurance in Sri Lanka is about matching a policy to your financial goals, family needs, budget and risk tolerance. Below is a clear, practical guide you can follow step‑by‑step, plus a checklist you can use when comparing policies.

1. Decide the purpose of the policy

• Income protection for dependents (replace your salary if you die).
• Debt protection (cover a mortgage, business loan, education loans).
• Savings / investments (endowment, whole life, unit‑linked policies).
• Retirement top‑up or building a legacy (pension/annuity features, whole life).
• Child education fund (policies designed to build a lump sum for schooling).

2. Understand the main policy types

• Term life: pure death cover for a set period. Usually lowest cost per unit of cover. No maturity benefit.
• Endowment: combined life cover + savings; pays on maturity or death. Regular premiums, guaranteed/maybe non‑guaranteed returns.
• Whole life: life cover for whole life, may include cash value accumulation.
• Unit‑linked (investment‑linked): part insurance, part market‑linked investment. Returns vary with market performance.
• Survivorship/joint life: covers two people and pays on death of the second (used for estate planning).
• Group life: employer provided; usually basic cover—check portability and coverage amount.

3. Important features and terms to compare

• Sum assured (death benefit): how much your family would need. Aim to cover 7–15× your annual income depending on liabilities.
• Premium: level vs. increasing, monthly/annual payment frequency.
• Policy term: should match your key liabilities (e.g., until retirement, mortgage end).
• Riders/add‑ons: critical illness, accidental death, disability waiver of premium, hospital cash. They increase cost but add protection.
• Maturity benefit & bonuses: for saving policies — guaranteed vs. non‑guaranteed (bonuses).
• Surrender value / cash value: how much you get if you stop the policy early.
• Free look period: time to cancel after purchasing without penalty.
• Exclusions & waiting periods: what is not covered (e.g., suicide clause, pre‑existing conditions).
• Claim settlement process & documentation requirements.
• Premium escalation/guarantees: will premiums stay level?
• Investment funds & charges (for unit‑linked policies): management fees, fund choices.
• Policy loan facility: can you borrow against the policy?

4. How much cover do you need? (simple approach)

• Calculate essential needs: outstanding debts + living expenses for dependents until they’re independent + future goals (education) – liquid savings and other insurance.
• Example quick formula: Sum assured ≈ (Annual income × replacement years) + liabilities – savings.
• If unsure, use 10× your annual income as a starting point, then adjust for dependents, loans, and existing assets.

5. Choosing between term and savings policies

• If your primary goal is protection for dependents and affordability: term life is usually best.
• If you want forced savings, guaranteed returns and a maturity lump sum: consider endowment or whole life.
• If you want market exposure and flexibility: consider unit‑linked but be aware of higher charges and market risk.
• You can combine: term for large protection + a small savings policy for disciplined accumulation.

6. Evaluate insurer strength and reliability

• Financial strength and capital position (insurer solvency) — shows ability to pay claims.
• Claim settlement ratio and average turnaround time.
• Customer reviews and complaint records.
• Local presence and agent/service network for fast assistance. Note: Specific company rankings and ratios change over time — check recent sources or regulator data before finalizing.

7. Pricing and affordability

• Get quotes from at least 3 different insurers for the same sum assured and term.
• Ask for a premium breakdown (base premium + rider costs + admin fees).
• Choose a premium you can comfortably pay for the full term — lapses early reduce or nullify benefits.
• Consider level term with convertible/renewable options if you want future flexibility.

8. Health and underwriting considerations

• Full disclosure of medical history; non‑disclosure can void a claim.
• Expect medical examination or tests for larger cover amounts.
• Smokers and certain occupations attract higher premiums.
• Compare simplified issue policies (less medical underwriting) if you need quick cover; they cost more and often have limits.

9. Legal, tax and regulator points (Sri Lanka context)

• Confirm tax treatment of premiums and benefits under current Sri Lankan tax rules (these change; check latest guidance).
• Policies regulated by the local insurance regulator — verify insurer is licensed.
• Check beneficiary nomination rules and how to update beneficiaries after major life events.

10. Practical buying checklist (ask the insurer/agent)

• What is the exact sum assured and premium? Is the premium guaranteed?
• List of exclusions and waiting periods (suicide, pre‑existing conditions, pandemics if applicable).
• Cooling‑off/free look period length and cancellation penalties.
• Claim settlement statistics (ratio, average processing time).
• Documents required to make a claim and for underwriting (medical, income proof).
• Surrender value schedule and early termination charges.
• Are policy documents in Sinhala, Tamil and English? (important for comprehension)
• How are bonuses (if any) declared and credited?
• What riders are available and their cost?

11. Common mistakes to avoid

• Buying based on premium alone — cheaper can be inadequate.
• Letting cover lapse due to unaffordability — choose realistic premium.
• Not disclosing medical history.
• Relying solely on agents’ verbal promises — get everything in writing.
• Not reviewing coverage after major life changes (marriage, children, home loan).

12. After purchase — maintain and review

• Keep copies of policy documents and the policy schedule.
• Review coverage every 2–3 years or after major life events.
• Update beneficiaries when needed.
• Keep premium payments up to date; set automatic payments if possible.

13. Where to get independent help

• Compare quotes using reputable local comparison services or licensed insurance brokers.
• Consider advice from a certified financial planner if the policy is for long‑term savings/investment or estate planning.

14. Quick action plan

• Step 1: Decide protection vs savings goal.
• Step 2: Estimate needed sum assured (use formula above).
• Step 3: Collect 3 quotes for the same cover type and term.
• Step 4: Compare features, riders, exclusions, surrender/cash values, and insurer reliability.
• Step 5: Choose the policy you can afford long term and complete full disclosure during application.

If you’d like, I can:

• Help estimate a target sum assured if you give me your age, annual income, outstanding liabilities and number of dependents.
• Or, if you prefer, I can show a sample comparison table template you can use to compare 3 policies side by side.