What to Consider Before You Select a Term Insurance Plan?
Updated On Aug 28, 2021
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A term insurance is a type of life insurance plan that is known to be in its cheapest and purest form. A term insurance plan provides life coverage upto a pre-decided time period referred to as ‘term’. A policyholder can avail high term insurance cover at an affordable rate. Although a term insurance plan offers various benefits, there are several ways through which a policyholder can maximise their coverage in order to avail high coverage at lower premium amount.
Factors to Consider Prior to Selecting a Term Insurance Plan
Some of the factors that a policyholder must consider before opting for a term insurance plan are as follows:
Carefully Assess Your Insurance Needs
Before buying a term insurance plan, you must ask the following questions from yourself:
- How much do you contribute to the overall family income and how many people are financially dependent upon you?
- Does your family have an alternate source of income in order to meet everyday expenses and repay debts after your unforeseen demise?
The answers to the above questions would help you in analyzing the amount of coverage required by you. The assessment exercise to be done by you should ensure the total amount of life insurance coverage that you would opt for would give the much-required financial security to your family members post your death.
Select an Insurance Cover that is Affordable
Once you have carefully assessed your life insurance requirements, decide how much it would cost you with regards to annual payable premium. Before buying a life insurance plan, make sure to see if you are in a position to pay the premiums for the entire policy duration. In case your insurance requirements are huge, then it won’t make any sense to opt for a savings cum protection plan. A term insurance plan would be an ideal option for you as it is cheaper and you would be easily able to pay for the premiums.
Do Comparison of Insurance Plans
The two basic types of life insurance plans available in the market are savings-cum-protection insurance plan and term insurance plan. A term insurance plan would offer indemnity against life situations that can be financially distressing for you. A term insurance plan offers only for the financial security of your dependents against an unfortunate event, wherein you would not receive any personal benefits. Your choice should be based upon your requirements, both immediate and future.
Check Claim Settlement Ratio of Insurance Company
You purchase an insurance plan, so that whenever any future need arises, your insurance provider pays the promised benefits. Just as your insurance provider verifies your insurability, make sure to check the claim settlement ratio of the insurance company. This exercise would not take much time and effort as the claim history of an insurance company can be easily researched online.
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.