Tips to Choose the Right Term Insurance Plan
Published On Aug 22, 2021 6:00 PM By Gunjan Anand
Table of Contents
A term insurance policy comes to rescue the policyholder’s family in his absence. The plan is designed to providing policy coverage in case he passes away. Generally, the term insurance cover is purchased equal to ten or twenty times the policyholder’s yearly income. There are different types of term insurance plans available in the market that comprise a pure term policy, an increasing sum assured policy, a term plan with the income benefit, and a return of the premium policy.
In addition to these policies, you also got an option to add different types of add-on covers to your term plan based on your needs such as critical illness cover, accidental death benefit rider, waiver of premium, and so on. However, while choosing a term insurance policy, many people get confused as to how much should be the sum assured, policy term, policy type, etc. So, let us discuss some common tips to select the most suitable term plan.
Tips to Select the Right Term Insurance Plan
Here are some tips following which you can make an informed decision to choose the right term insurance policy:
Assess the Policy Cover
While determining the term insurance cover, you should consider your stage of life, number of family members, future goals, etc. However, the members of your family may differ at different stages of life with your marriage, child’s birth, etc. It can increase your financial responsibilities, therefore, you should choose the sum assured accordingly.
Analyse Your Family’s Lifestyle
You should consider your family’s lifestyle while purchasing a term insurance plan that may include the expense of your household, etc. In addition to these, you must also take your loans and liabilities into account such as home loans, personal loans, car loans, etc., so the burden of EMIs do not fall on the shoulder of your loved ones after your demise. At the time of life cover, do not forget to take inflation into consideration while deciding the cover.
Understand Your Family’s Needs
Selection of term insurance policy coverage amount should not be based only upon your income but the requirements of your loved ones as well. Irrespective of whether you are a breadwinner of your family or just an earning member of your family’s total income, you should select coverage equivalent to the sum of your income needed to meet the expense of daily bills of your family.
Check Claim Settlement Ratio
A term policy is worthless if you could not get the claim against it. Hence, you should select a term insurance plan from an insurance company that holds an impressively high claim settlement ratio. It refers to the number of claims which got settled against the ones filed by the policyholders in a policy year. The higher the claim settlement ratio will be, the better will be the possibility to get the sum assured amount completely and easily.
Get Riders to Maximize the Coverage
Like any other insurance scheme, a term insurance policy also comes with some add-on covers or riders such as accidental death benefit rider, critical illness benefit rider, waiver of premium rider, etc. The purpose of these covers is to enhance the policy coverage and benefits. You can avail of them by paying an extra premium amount along with the standard policy premium. So, you should opt for riders that you actually require.
When it comes to choosing a term insurance policy, you need to keep some tips in mind to find the most suitable plan for you. In this article, we have mentioned a few common points to be considered while selecting a term insurance cover. We hope following these will help you get the right plan quickly and easily.
What Is The Need To Purchase A Term Insurance Plan?
Term Insurance Riders and How They Benefit You
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.