How To Select The Perfect Term Insurance Plan For Your Protection Needs?

Term insurance plans have a very basic structure: the insurer covers the life assured for up to 65 years, pays a sum assured upon the death of the life assured, and premium is paid once a year. However, as more insurers has begun selling online term life insurance coverage, the plans became increasingly complicated. Increasing coverage plans, limited pay plans, staggered payout plans, return of premium plans, and hundreds of other combinations are now available. While having so many options is beneficial, it is also making it difficult for most of the people to determine which plan to purchase. In this article, we will discuss the most significant factors to consider while selecting a term insurance plan for your protection needs.

How To Select The Perfect Term Plan For Your Protection Needs?

Here are a few things to think about when purchasing term life insurance.

1. Calculate the Adequate Coverage

Your term life insurance policy should consider how much money your family would require in the event of your unexpected death. Monthly expenses, annual income, future expenses, outstanding loans, existing insurance and savings should all be considered when determining the amount of term insurance you need. Moreover, for the number of years comparable to the term tenure, future expenses should be adjusted for inflation. The Human Life Value Calculator is a simple tool to get you started.

Must Read: Why New Parents Should Buy Term Life Insurance?

2. Decide on the Appropriate Plan Tenure

After you've determined how much coverage you'll require, you'll need to determine how long you'll require it. The insurance should not be for a short term, as it may lapse before your financial responsibilities are met. At the same time, the term should not be too long, as the premium paid would be excessively expensive due to the longer tenure. You can determine the right tenure by considering the time until when your children and dependents would need monetary support after your death.

3. Choose a Reliable Term Insurance Provider

Understanding the insurer is another important factor to consider. You can calculate and compare premiums and features offered by several insurance providers to choose the one that best suits your needs. Here are some of the parameters to search for:

• Claim Settlement Ratio (CSR) - It provides an estimate of the number of claims the insurance company has settled. It is advisable to invest in insurance firms with a high CSR.
• Solvency Ratio - The Solvency Ratio indicates whether or not the insurer is capable of paying out claims to policyholders. All insurance providers are instructed by the IRDAI to maintain a solvency ratio of 1.50.

4. Provide Accurate Personal Information

The majority of insurance companies deny claims due to inconsistencies in the information provided on the claim form. You must spend time reading over the insurance form and entering in the correct information, particularly your profession, date of birth, family medical history, medical history, lifestyle habits like smoking, drinking, any other insurance policies you have and so on. If medical tests are recommended, take them since they will provide you with the most accurate picture of your health.

5. Buy Necessary Riders

Term life insurance products include rider options at a fair cost that can be considered for additional protection. Waiver of premium rider, critical illness rider, partial and permanent disability rider, and accidental death rider are some of the rider alternatives. The premium waiver for critical illness riders comes at a reasonable cost. The critical illness coverage rider is the most expensive. You must conduct extensive study to determine whether the additional benefits are appropriate with the premium charged. And make sure to read the tiny print on all of the add-ons, as the terms and conditions vary per insurance company.

Take Away

Term life insurance is a long-term contract between you and your insurer that protects your family if you pass away. You can examine all five pointers highlighted in this article when selecting the perfect plan for your family. Moreover, your family or beneficiary should be informed about your life insurance so that they can easily claim it once the time comes.

Also Read: Why Term Insurance Is More Beneficial Than Other Types Of Life Insurance Policy?

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.