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*
No medical checkup required
Save more with upto 10% discount
Covers COVID-19
Tax Benefit
Upto Rs. 46800
Life Cover Till Age
99 Years
8 Lakh+
Happy Customers
*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*
No medical checkup required
Save more with upto 10% discount
Covers COVID-19
+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

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
Unique Features In Term Insurance

27 Jun 2022

Policybazaar has actively striven to make insurance buying easy...
Read more
Term Life Insurance For 65-year-Old Male

26 May 2022

Term insurance has traditionally been considered a protection...
Read more
How Term Insurance Plans Cover Home Loan Risks?

26 May 2022

Owning a house is one of the goals that everyone set for...
Read more
How I Can Secure My Wife's Future with MWP Act?

26 May 2022

Starting a family is a big responsibility. While people consider...
Read more
Term Insurance For Over 50s

26 May 2022

Old age is the time when most individuals want to enjoy their...
Read more
2 Crore Term Insurance Plan
The pandemic has surely generated a global panic and emphasised the importance of financial planning that would...
Read more
Term Insurance For Housewife
Being a housewife seems an easy and thankless job to people. On the contrary, being a housewife should be the...
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
Types of Deaths Covered and Not Covered by Term Insurance
Types of Deaths Covered and Not Covered by Term Insurance When it comes to securing the future of your loved ones or...
Read more
Term Insurance Plan Calculator 2022 - Calculate your Term Insurance Premium Online
Term Insurance Calculator A term plan premium online calculator is a freely accessible online tool that helps to...
Read more
top
View Plans
Close
Download the Policybazaar app
to manage all your insurance needs.
INSTALL