Sum Assured In Term Plans

Factors that govern term life premiums are determined by an individual’s age, health, and life expectancy. It is important to select the right term insurance sum assured amount such that your nominee/beneficiary has adequate funds to tide themselves over with it in times of need. Those choosing to buy a term plan should consider their medical history, the number of dependents they have, and the premium they are willing to pay. It is wise not to fall into the trap of a low premium as it may end up offering inadequate life coverage. Individuals may seek the aid of a term insurance calculator to understand the approximate premium they would require for availing a term insurance plan.

How To Determine The Sum Assured Of A Term Insurance Plan

Individuals must consider the number of years they expect to work and earn a living. Keeping in mind the fact that this form of insurance serves as an income replacement mechanism, they can use the desired retirement age as a factor that guides the sum assured amount they select. Interested buyers of this form of insurance must understand, analyze and highlight monthly expenses such that they are able to gauge what their family tends to spend money on and how much money is used each month. Once there is an understanding of their family’s lifestyle funding requirements, those interested in this insurance will have a better idea of how much they should pay and whether they can increase the amount such that their term insurance benefits can help their family sustain their lifestyle. Knowledge of any recurrent and ongoing expenses ranging from utility bills to school fees is vital here.

Big life plans which can be financially draining ought to be considered as well. Events included under this category range from marriage and retirement to paying tuition fees for higher education overseas.

Investments, savings, and liabilities must be considered and assessed in order to choose an appropriate term insurance sum assured amount. Each of these factors mentioned can help clear doubts pertaining to what the sum assured amount ought to be.

Factors To Consider Prior To Buying A Chosen Term Plan

Those seeking to avail of term insurance must also consider the following considerations –

• Determine what’s included and excluded in the term plan of choice – It is important to consider the selected plan against others presently available in the market. Due diligence is an absolute must such that there is no scope for misunderstandings in the future on the part of the insured individual.
• Medical requirements involved in submitting the proposal form – Queries made pertaining to health must be answered with accuracy as they determine what form of medical examination is required.
• Other important factors to consider - In addition to the above-mentioned factors, individuals must also consider the needs of their family, check the claim settlement ratio of the insurance provider and consider getting additional riders, if needed.

Conclusion

Keeping in mind the ever-changing and uncertain landscape associated with present times, it is advisable to acquire any and all forms of financial protection that provide support to both an individual as well as their family. Term insurance is one such recommended measure that individuals can seek to purchase as it can provide them and their beneficiaries/nominees with coverage. In order to determine the most appropriate amount of sum assured under term insurance, individuals must consider their age, medical history, major financial goals, the number of dependents they have, and the amount of premium they will be willing to pay. Each of these factors in addition to their investments, savings, and liabilities can be used to determine what this amount ought to be. A term insurance calculator can prove to be a useful tool to determine your approximate term insurance premium.

Also read: Opting For Life Insurance After Retirement

Elaborating The Meaning Of Accidental Death Benefit