Factors To Consider Before Buying A Term Insurance Plan
Updated On Jul 01, 2021
Table of Contents
Term insurance plan is a very simple product; your life is insured until you pay regular premiums. In case of your unexpected demise, the insurance company pays out a lump-sum amount to your family that can bring financial stability and also aid in paying off any liabilities you left behind. However, if you are not careful when you are buying the policy, your family might have to face financial hardship in your absence, despite your best efforts.
That’s why we have compiled a list of things you should keep in mind while buying term insurance.
Factors To Consider Before Purchasing A Term Insurance Plan
Here is a list of a few pointers that you need to keep in mind while purchasing a term insurance plan:
1. Amount of Cover
Arriving at the amount of life cover needed is the most important task. There are many online tools and calculators available for help. These calculators consider the age, lifestyle habits, number of dependents, current loans, average monthly expenses and rate of inflation to arrive at the amount. One can also take the help of an independent financial adviser for the same.
2. Policy Period
The policy period is the next important choice to make. When the policy is purchased at an early age, it is advisable to choose the maximum available policy period. This ensures a relatively lower premium for the entire duration of the policy.
One can buy policies through agents or the company. Alternatively, one can access the websites of insurance aggregators who provide comparable quotes for the same amount of coverage and term. The premium offered by aggregators or direct platforms is typically lower.
4. Insurance Provider Record
It is important to consider factors such as the vintage of the insurance company, customer reviews, claim settlement ratio and its financial strength. Besides, one should also give a higher weightage to the customer-centricity of the company, with respect to sales, service and payment options.
5. Buying Age
One need not buy an insurance policy for a term that goes beyond the person’s retirement age, as most of the dependents would have become financially independent by then. An insurance policy bought at an earlier age in life has a relatively lower premium than one bought later.
As there are many plans available in the market it is always advisable to compare as many plans as possible before finalizing the one you want to buy. There are a lot of things that you should keep in mind before buying a term insurance plan. This article will surely help you to know those important points that should be kept in mind.
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.