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All You Need to Know About a Term Insurance

Updated On Aug 29, 2021

A term insurance policy is a particular type of life insurance cover where a policyholder is offered security for a specific time period. A death benefit which is guaranteed to the nominee assigned by the policyholder is offered only in the event of death of the policyholder during plan term as mentioned under the plan terms. Therefore, the objective of a term insurance plan is to protect the financial requirements of the policyholder’s family members in the event of unforeseen demise.

Factors to Know the Ideal Term Insurance Plan

Given below are some of the comparison factors that you must consider in order to buy an ideal term insurance plan:

1. Insurance Cover Required: To know the amount of insurance coverage required by you carefully assess your assets and financial liabilities. Other than this, your health and age also plays an important factor in deciding your plan duration, cost of premium payable and the total amount of insurance coverage that you obtain from the premiums paid by you.

Must Read: How To Claim Life Insurance Benefits After A Policyholder's Death?

2. Insurance Company’s Reputation: It is extremely important to address some crucial questions regarding the insurance provider before purchasing the term insurance plan for them. Some of these questions are:
- For how long have they been offering insurance plans to the customers?
- Is the insurance company well established and are customers satisfied with the services offered by them?

3. Terms and Conditions: It is always wise to go through the policy document of your term insurance plan before you sign the documents and make the payment. Generallly, most of the insurance companies do not offer any kind of death benefit cover in case the policyholder dies because of suicide or self harm. Going through the plan document would help in understanding the major exclusions and inclusions of the plan you are thinking of buying.

4. Claim Settlement Ratio: One way to know regarding the credibility of your insurance company is by checking their claim settlement history. A claim settlement ratio indicates how many insurance claims get settled by the insurance provider out of the total claims received by them. The higher the claim settlement ratio, the better it is.

What Affects the Term Insurance Premium Cost?

As is the case with life insurance plans, the same is with a term insurance plan which gets affected based on the age of the policyholder. The older an individual is, the higher insurance premium they are likely to bear. This is because with the increase in age, the possibility of an individual acquiring health related diseases also increases, which is riskier for the insurance companies, therefore, the premium amount also increases. Similarly, your previous medical records are also considered when you go to buy a term insurance plan. The more the number of pre-existing illnesses depicted by your medical history, the higher would be the premium payable towards your term insurance plan.

At The End

A term insurance plan is a wise way to protect the well being of your family members financially in the event of your unforeseen demise. There are several insurance plans available in the market, it is advisable to go through the afore-mnetioned factors before purchasing a term insurance plan in order to get the best plan at an affordable premium.

Also Read: Why Is It Important to Renew a Term Insurance Plan?

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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