5 key Factors You Should Consider While Purchasing Term Insurance Plan

For most individuals, purchasing term insurance has become a necessity more than a choice. Nowadays, term insurance has gained huge popularity among customers and more and more individuals are keen on purchasing the policy. With a continuous increase in demand from customers, the insurance companies offer an extensive range of term insurance policy. 

Read more
Get ₹1 Cr. Life Cover at just ₹449/month+
Term Insurance plans
Online discount
upto 10%+
Guaranteed
Claim Support
Policybazaar is
Certified platinum Partner for
Insurer
Claim Settled
98.7%
99.4%
98.5%
99%
98.2%
98.6%
98.82%
96.9%
98.08%
99.2%

+Tax benefit is subject to changes in tax laws. +Standard T&C Apply

++Discount is offered by the insurance company as approved by IRDAI for the product under File & Use guidelines

Get ₹1 Cr. Life Cover at just ₹449/month+
+91
View plans
Please wait. We Are Processing..
Get Updates on WhatsApp
By clicking on "View plans" you agree to our Privacy Policy and Terms of use
We are rated
58.9 million
Registered
Consumers
51
Insurance
Partners
26.4 million
Policies
Sold

However, choosing the right policy can always be a herculean task for policy buyers. With different options available in the market, it is quite easy for policy buyers to get attracted to the insurers, which offer a lower premium. 

However, one might end up buying insufficient coverage, by just focusing on a lower premium. Thus, buyers need to consider the following factors while purchasing a term insurance policy.

Estimate the Coverage Amount you Need

An individual should consider choosing the term life insurance coverage that will be adequate enough to take care of the family’s financial need in case of any uncertainties. The best way to choose the right coverage is to calculate the following.

  • First, estimate the monthly expenses of the dependent’s family and multiply it by 150. The multiple of 150 factors in future inflation.

  • Second, add all future liabilities like personal loans, home loans, credit card bills, etc.

  • Third, deduct the liquid assets that you have like mutual funds, FDs, stocks, etc.

  • Fourth, consider the future expenses that may occur as the future financial goal like your child's education, marriage, etc.

  • Also, don’t forget to add the retirement corpus that you would like to leave for your spouse.

By calculating all these factors, you will be able to evaluate the amount of coverage you need to secure the financial future of your family.

Determine the Policy Tenure

Once the coverage amount is determined, it is important to know the term period of the policy you would need it for. You should not choose a smaller tenure as the policy will lapse before the completion of the financial obligation. Similarly, you should not choose too long policy tenure as the premium charge will increase with the increase in age and you will end up paying a very high premium.

It is important to choose the right policy tenure. The right way to estimate the tenure of a term insurance plan is to determine the liquid net worth after subtracting the liabilities. The age at which your liabilities will be covered by your liquid net worth should be the right age till which you need coverage.

Choose the Riders Carefully

 Term insurance policies offer different rider options to enhance the coverage of the policy. Thus, it is important that you go through the benefits offered under the rider option before choosing the one. There are four different types of riders offered by the term insurance policy. These are:

  • Accidental death benefit rider

  • Critical illness rider

  • Waiver of premium rider

  • Accidental disability benefit rider

  • Income benefit rider

Don’t Forget to Check the Claim Settlement Ratio of the Insurance Company

It is the most important factor to consider while purchasing the term insurance policy. The claim settlement ratio shows the efficiency of the insurance company. The higher the claim settlement ratio of the company will be, the more efficient it will be at settling the policy claims. Thus, you should always consider purchasing a policy from a reputed insurer, which has a higher CSR ratio. By this way, you will be ensured that the claim filed by the nominee of the policy will be paid in case of an eventuality.

Consider Purchasing a higher Coverage

Whether you buy a 1 crore term insurance plan or not, it is important to know that the coverage you choose for your term plan should be 10-15 times your annual income. As a comprehensive and simplest form of life insurance product, the term plans offer the advantage to purchase a higher coverage amount at a minimal premium rate. Thus, make sure that you follow this thumb rule while purchasing a term insurance plan and also consider the other significant factors like health conditions, age, dependents, annual income, etc. By considering all these factors equally and by comparing the quotes of the plan online you will be able to select the most remunerative plan as per your suitability and requirement.

The Bottom Line!

The insurance experts always advise purchasing the policy at a young age, as with the increase in policy tenure the premium of the policy also increases. By considering these factors you can choose the term insurance policy that fits your requirement right and ensure the financial security of your loved ones.

Types of Term Plans


Term insurance articles

Recent Articles
Popular Articles
Why NRIs in UAE Should Buy Term Insurance Plans from India?

08 Dec 2022

Term life insurance plan secures the financial future of your
Read more
Best Term Life Insurance Plans in Singapore

07 Dec 2022

An NRI living in Singapore can easily buy the best term life
Read more
Term Insurance for NRIs in Singapore

07 Dec 2022

As an NRI living in Singapore, you are likely to be constantly
Read more
LIC Relaunched A Term Assurance Plan: LIC New Jeevan Amar

25 Nov 2022

Life Insurance Corporation (LIC) of India recently relaunched
Read more
HDFC Term Insurance Customer Care

18 Nov 2022

HDFC life insurance company offers various term life insurance
Read more
Zero Cost Term Insurance Plan
Zero-cost term insurance is a new variant of term plans in which the policyholder has the option to exit the term
Read more
Life Insurance Companies in India
Top Life Insurance Companies of India With Claim Settlement Ratio Life Insurance Companies in
Read more
Term Plan with Return of Premium - TROP 2022 | Policybazaar
Term insurance Return of Premium (TROP) is a variant of a term insurance plan in which the entire premium paid
Read more
Term Life Insurance for NRI in India
Every bread-earner wishes to provide financial security and stability to his/her family in some way. Whether you
Read more
LIC Term Insurance 1 Crore
If you have a LIC term insurance 1 Crore handy, you can cherish all your happy moments as you have made a fine
Read more

top
View Plans
Close
Download the Policybazaar app
to manage all your insurance needs.
INSTALL