How to Buy a Suitable Term Insurance Plan?

Going through different term insurance quotations, their features and benefits can be a daunting task.  There are a number of insurance providers in India that offer different types of term insurance plans. Therefore, it is imperative for you to know what makes one different from another.

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And if you have clarity as to why you need a term insurance plan, it is easier to select the insurance provider and the type of a term insurance plan would work the best for you.

Facts to Buying a Suitable Term Insurance Plan

Keeping your best interests in mind, we have put together certain facts that you must consider beforehand to make the right choice.

Claim Settlement Ratio

It is one of the most important parameters to decide upon an insurance provider and the term insurance plan that it is offering. You can find the claims settlement ratio of all the term life insurance companies in the IRDAI’s Annual Report. You can also check on the insurer’s website, as to how many claims they have settled in a year. And it should be maintained over the years. Some insurers get iAAA rating for their claim paying ability, they definitely make a good choice.

Compare Different Term Insurance Quotations

Decide among three to four insurance companies after comparing their policy features and benefits. Select the plan you want to buy and click on get a quote option. Provide the necessary details and submit the form. You will get free term insurance quotations from the insurer.

Once you get different term-life insurance quotations, compare all of them and choose the one that caters to most of your needs and preferences in terms of the policy period, budget, premium, and coverage.

Selecting the Right Term Insurance Coverage

Have a fair estimate of the amount of your term insurance plan; go through their plans, benefits, and limitations.

Sometimes the basic thumb rule of buying term insurance cover i.e. 15 to 20 times of your annual salary might not fit. The threshold can vary from person to another. For someone Rs. 1 Crore would be sufficient and for someone, even Rs. 2 Crore can fall short. It will depend on your salary, number of dependents, and future financial goals.

Below is the simple formula that can help you determine the right term insurance coverage amount:
Term Insurance Cover = [Family’s Lifelong Expenses (including inflation till retirement) + Expenses on Future Goals + Loans/ Debts] – Savings

While you calculate term insurance coverage amount take into consideration your family’s financial needs.

For example: if your family’s current expenses are Rs. 60,000 a month, then a nominal 8% inflation will increase it to Rs. 80,000 in the next five years. In 10 years, it will grow to Rs. 1 lakh. Moreover, you should also consider your outstanding loans/debts, major expenses like your children’s higher education/ marriage the number of years your dependents will need income support. From this amount, if you deduct your savings you will get the required term insurance coverage amount.

Time Period

Duration is a crucial factor when it comes to selecting the right term insurance plan. If you want a lifelong insurance plan to protect your family after your demise then a whole life insurance plan is the right choice. It includes a death benefit for as long as you live and even if you die tomorrow. You should look for a plan that covers at least Human life value, which includes your salary cover and loan reimbursements if any.

If you need a term insurance plan for a certain time period, you can go for term insurance. If you want to save some funds for your children's education, then you can buy a 10 or 20 years term life insurance plan and choose an insurer that offers the same.

To pay off debts, you can buy a plan for that specific period.  It is recommended that you buy term insurance cover at a young age if you want to buy it only. You will be able to accumulate more savings in that way.

Term Insurance Premium

If you are planning to buy term insurance just for investment or tax saving purpose, then premium plays a crucial role. For instance – the cost of the premium for ULIPs and Whole life insurance policies are on a higher side as compared to term insurance plans. You can go for a term insurance plan with a nominal premium. Because your policy can lapse if you fail to pay the premium on time. But if you are more concerned about the maturity benefits then you can give it a skip.

Look out for Term Insurance Rider Benefits

You can enhance your term insurance coverage with rider benefits such as waiver of premium, accidental death benefit, disability rider benefit, critical illness rider etc. However, the benefits vary from insurance provider to another. You can always go for the one that offers the riders that serve your needs and requirements. Because you will have to chip in extra premium for enhancing your policy coverage with riders benefits.


If you are the only breadwinner of the family, buying a term insurance policy from the right insurance company should be a priority for you. The reason is your family who is dependent on your income solely, and nobody wants their loved ones to suffer due to loss of income in case of sudden death. Analyze the number of dependent members of your family and search for a provider that provides maximum coverage.

Discounts Offered

If you are buying a term insurance plan online, it is always better to look for discounts that the insurer might be offering on the online purchase.

Claim Process Must be Quick

Buying a term insurance policy is one thing. The other important thing that you need to check is the claim settlement process. It is recommended to select a life insurance company that has the minimum turn-around time. The best way is to go checkout the customer reviews and see what they have to say about the claim settlement services.

Once you have selected the term insurance plan you can make the payment.

Over to You!

Choosing an adequate term insurance cover among so many options can get confusing. However, you can follow the above-mentioned tips in order to buy the right policy from the right life insurance company at the right time. You can ensure your peace of mind and secure your family’s future, by easily purchasing a term insurance plan online. Moreover, it is easy to search, compare, get quotations and then pay for the best term insurance plan.

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