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How To Choose A Right Term Insurance Policy?

Life is full of unexpected events that occur without warning. A life insurance policy can provide financial security for your family in the face of such uncertainties. This type of plan will serve as an income replacement for your family members. Term insurance is a contribution that ensures the financial stability and security of your family in the event of your death. If a person has insurance through this policy, they must pay a set amount on a regular basis. However, in the event of the death of the insured at any time, the nominees named by him at the time of policy purchase will be paid a lump sum.

Key Points You Should Consider While Purchasing Term Insurance

When it comes to making the final decision to purchase a term plan, most of us are often perplexed about the amount of life cover to choose, the policy period, which insurer to choose, and what plan to purchase. Here are a few pointers to help you make an informed decision- 

Tip 1: Phase of Life

When determining the amount of coverage, consider your life stage and the number of family members. Your dependent family members may change as you progress through life. A single person's financial responsibilities are not the same as those of a married or childless person. The amount of coverage should be chosen accordingly. Remember to keep an eye on the future and plan for increased financial responsibilities.

Tip 2: Standard of Living

Consider how much your family will require to maintain their current standard of living.
While dependent family members are considered, the extent of coverage is largely determined by your family's current lifestyle. Calculate the amount of money needed to maintain your current lifestyle, remember to account for inflation, and plan your life insurance accordingly.

Tip 3: Deciding The Coverage 

The amount of coverage should be determined based on the needs of your family, not just your income. Whether you are the sole breadwinner of the family or a contributing member to the family's collective income, choose a cover amount that is equal to the amount of income required to sustain your family's daily bills. 

Tip 4: Check Liabilities

Increase the Coverage Amount by the amount of any liabilities you may have. Earning people are frequently burdened by existing liabilities such as short-term loans, personal loans, home loans, and car loans. To avoid the burden of EMI repayment falling on your family, include the amount repayable of outstanding loans in the life cover purchased.

Tip 5: Pick The Plan With A Higher CSR

A higher claim settlement ratio is always preferable. Life Insurance Company should have an efficient claims settlement process in order to keep their promise of providing monetary reimbursement. The Claim Settlement Ratio is a numerical value that represents the number of claims settled in comparison to those filed. The higher the claim settlement ratio, the greater the likelihood of receiving the entire sum assured amount.

Tip 6: Select The Right Coverage

Determine which riders will provide you with the most coverage. In addition to the death benefit provided by a term plan, some plans provide additional coverage in the form of riders. Riders such as disability cover, loss of employment cover, and premium waiver cover can be added for a small additional premium. These riders significantly increase the value of the basic term plan purchased.

Take Away

Purchasing a term insurance policy is an excellent way to protect your loved ones financially. Every member of the family who earns a living should consider purchasing term insurance when they are young. Although you may never see your money again if you survive the term plan, the assistance it offers is well worth it. Make sure to compare various insurance plans and choose the one that best fits your needs.

Also read - Ways To Reduce The Cost of Your Life Insurance Purchase

6 Common Life Insurance Myths Debunked

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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