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How to Choose the Term Insurance Policy in 2021?

Life is extremely uncertain and none of us can predict what lies ahead for us. And the present times is the living example for it.

Have a term insurance policy in place and remain stress-free. The key aspect of a term insurance plan is that in case the primary earning member of the family passes away the financial future of the family is protected.

The term insurance premium is cost-effective and is one of the foremost simplified life insurance product. You can easily buy a term insurance policy online and secure your close ones from any of the financial liabilities. The term insurance premiums are nominal when compared to any other life insurance product.

How Important is a Term Insurance Plan in Times of COVID-19?

The requirement for financial related soundness is of principal significance at present and consequently, relatively few individuals would need to preserve however much money as could be expected. In any case, it is probably the best ideal opportunity to buy one of the most fundamental products, which is a term insurance plan at such a crucial and toughest of time.

Term plans are extra security approaches that defend your life for a fixed number of years. In case you are not around when the plan is still in power, by then the death benefit will be given to your family members to be specific the nominee.

The upside of buying the term plan is that it pays an appealing altogether guaranteed sum insured while having low premiums. At the point when funds are clear and you don't wish to spend a great deal on an exorbitant life plan, a term plan is an ideal instrument that will not be heavy on the pocket side as well.

Here’s Why Should You Buy a Term Insurance Policy?

Listed below are the key reasons that highlight the benefits of having a term insurance plan:

Easy to Buy

Buying a term plan is one of the easiest and convenient things to do. You can compare different term insurance premium quotes online and choose the right term insurance plan that suits your budget and meets the necessities. It is always advisable to buy a term plan online as they are extremely cost-effective with key benefits.

Financial Security

In case you are the only earning member of your family, then you should buy a term insurance plan at the earliest. Moreover, you have a home loan or a car loan and so forth, having the term plan will your family and they do not need to worry about the monetary obligations as a respective cover will be provided for the same.

Low Premium, Large Cover

The term insurance plan will secure the financial future of your family. However, it is to be noted that as your age increase the premium will likewise also increase. Therefore, it is recommended to buy a term plan and not delay it further as any eventuality can happen anywhere at any time. When buying a term plan choose a life cover, which is approximately twenty times the yearly income specifically if you are up to 40 years of age. In case you belong to the age group of the 50s then choose a life cover that is 10 times the yearly income.

Flexibility

Not every family is the same and so the needs are also different. It could be possible that some of the families might need a regular source of income whereas some families would look for a lump-sum amount. Term plans offer flexible payouts alternatives. Even the premiums could also be paid on a yearly or monthly basis. One may opt for a lumpsum payment or can opt to obtain a part of the sum assured.

Tax Benefits

If you have a term insurance plan in place you can easily enjoy the tax benefits within Section 80C. In case the insured passes away, the family can avail of tax benefits within Section 10 (10D) as well.

Note: The tax benefits are subject to change as per the existing laws.

Choosing the Term Insurance Plan in 2021

When it comes to buying a term plan, you do not wish to compromise upon the financial security of the family. Listed below are some important aspects that should be taken into account when buying a term insurance plan in 2021:

Premium Cost

With the above-mentioned pointers, you would have taken into consideration a few term insurance plans from different insurance companies. Now, it is time to make the final call. You mustn't compromise on the benefits just because of the expense. Moreover, term insurance premiums do offer tax benefits. Select the mode of premium payment as per your convenience and make sure that you opt for auto-debit in regards to the premium payment.

Solvency Ratio

As per the directions of IRDAI, it is a mandate that every life insurance provider has to maintain a 1.5 solvency ratio. The relevance of a solvency ratio is that it will let you know how capable the insurance company in terms of finances in settling the claims is. For instance, in case of a natural calamity most likely huge volume of the claims will be required to settle. Under such a circumstance, the solvency ratio becomes helpful.

Claim Settlement Ratio

This is one key aspect that should not be missed at any cost. Before you zero down the term insurance policy from any of the insurance company make sure that you do look for the claim settlement ratio. The rule is higher the ratio, the efficient is the insurance provider in settling the claims and the future of the family is secured. Look for the total number of claims that have been settled by the insurance provider.

Critical Illness Cover

 A term plan makes sure about your family's monetary future if there should be an occurrence of any adversity. In any case, with the passing of the breadwinner, a family's monetary security goes under danger. Critical illness like malignant growth or cerebrum medical procedure can cost a great deal of money and handicap the person’s family's accounts. Check with the insurance company and include the cover that would be required.

Rider Benefit Options

The term insurance plan offers life cover. However, it is recommended to opt for additional benefits and make the term insurance plan more enhanced in term of financial security. Moreover, look for the features that are available in the base plan. You can opt for additional rider benefit options such as waiver of premium, income benefit, and so on.

Wrapping it Up

Life will always be full of uncertainties and no warnings. Therefore, buying a term insurance plan will act as a cushion for your close ones and will help them with the finances against any adversities.

A term plan will act as the income replacement for your members of the family. The above-mentioned information will help you to choose the ideal term insurance plan in 2021 and you will make an informed decision.

Stay Safe!

Written By: PolicyBazaar - Updated: 18 May 2021
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