Life is unpredictable. In any unfortunate events, your dependents could be left in a state of uncertainty in terms of the financial support. This is where a term insurance plan helps you. It makes sure that even if you die, your dependents do not have to struggle with money.
Term plans offer a fixed sum of money to your family in case of your death. This amount is usually extremely high and often enough to cover financial requirements for years to come. This benefit is offered in exchange for payment of a premium. This premium is often one of the lowest you can get for any life coverage. The sum assured, premium, and term of the policy is decided at the time of buying the policy. However, buying the policy is a tricky process. This is because, there are important considerations you need to make before you select a plan and buy it. They include:
Insurance provider
It is advised to opt for policies from insurance providers that have great credibility among its existing customers. The best way to start is to check various providers’claim settlement ratio. At the same time, you can also look at customer reviews available online.In addition to these, you can look at factors such assolvency ratio, corporate governance record, assets under management, etc.
Add-ons
Having the option of including add-ons can be helpful if required. You should look for insurance providers and term plans that offer the set of add-ons that you may want to buy with your policy. Some add-ons that you should be on the lookout for are accidental death cover, permanent and partial disability cover, and critical illness cover among many others. Add-ons like these offer an extra layer of coverage for specific situations.
Coverage amount
A term policy is only useful if it adequately covers your family after your death.While there are so many term insurance benefits in India like affordable premiums, they are not enough unless the coverage amount of the policy is adequate. The adequacy of the coverage amount depends on your personal and financial situation along with future expenses. Generally, it is advised to get a claim amount that is between 10 to 15 times yourcurrent income. However, it is smart to go higher and get a coverage amount that is 15 to 20 times higher than your income. Doing so, also accounts for inflation that may affect your family’s future requirements.
Premium
Premium is essentially the fee you pay for the coverage. Make sure that you can afford the premium for the coverage you have selected. Also, you should look at whether you have to pay the premium on a regular basis or make a one-time payment for the entire term of the policy. Use a term insurance calculator to find out more details regarding your premium amount.
Keep these above-mentioned aspects in mind before your term plan purchase. It will enable you to take a better decision that fulfills your requirements and bypasses any hassles in the process.
