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What Should I Look for When Buying Term Insurance Plan?

A term insurance plan is one of the simplest insurance products accessible in the market. The term plan has earned the trust of the customers in regards to securing the financial future of the family.

However, as a customer, it is necessary to understand that buying the term insurance plan is just not limited to paying the premiums timely and expecting the family to be safe for the prospective years. It is highly important to understand the product and also consider certain aspects before you zero down a term insurance plan. Understanding the product will keep you safe from any unpleasant surprise.

Listed below are the aspects that you need to be sure before buying the term plan:

1: Calculate Term Insurance Coverage

A term plan mainly is on the premise of the requirement of the family that they would need in case you are not around or if a mishap occurs. To begin with, find out the monthly expenses of your family members or your dependents and take into consideration the factor of inflation. Besides, also consider any debts or liabilities such as a personal loan, home loan, credit card bills, etc. and excluding the liquid assets such as the mutual funds, stocks or fixed deposits. It is to be noted that you should take into consideration of the unavoidable future life objectives and then only arrive at estimation.

2: Policy Term

Now that you know the coverage that would be needed the next step would be to know until what age the insurance cover would be required. The market is flooded with both short-term and long-term term plans. Therefore identify the objectives and requirements and accordingly choose the correct term insurance policy term. The term plan shouldn’t be too short as possible the plan might elapse before even the financial obligations are duly completed. On the other hand, it should not even too long as you might not need it after the financial obligations are met. Moreover, the term insurance premiums would also be high in case of a higher term. To determine the term of the insurance cover, you need to find out the year wherein the liquid net worth is higher than your cover of term insurance plan. This will be the age that you should take into consideration of a term insurance cover as after that the assets will cover your family in any emergencies.

3: Choose the Add-ons

The term insurance plans comes up with different rider or add-ons options that should be included in a term insurance plan. Some of the key rider options available within a term insurance plan are critical illness, disability benefit, accidental benefit, and so forth. The rider benefit option such as a waiver of premium rider comes with a low premium rate and the critical illness rider is slightly on an expensive side. Therefore, on the premise of the requirements, you can choose the add-on rider benefits; however, you need to pay a little extra for the same but it will be worth it.

4: Claim Settlement Ratio

The claim settlement ratio essentially indicates the efficiency of settling the claims of a specific insurance company. So when you see the higher claim settlement ratio like a 98 per cent it means that out of the 100 claims 98 were successfully settled by the insurance company. This does not mean that you should make this the only sole criteria for deciding the term insurance company. This could be a filter but not make this the decision-making criteria.

5: Solvency Ratio

In case of a natural calamity the insurance company needs to be financially strong in settling the considerable number of the claims at a time. It is advisable to determine the financial position of the insurance company. The solvency ratio will give an idea in regards to the same wherein the insurance company with a high solvency ratio has mostly fewer chances of being bankrupt.

6: Buy the Plan Online

A term insurance plan can be bought both offline and online as well. However, considering the times of COVID-19 and even after that, it is advisable to buy a term insurance plan online. Likewise, you can also use a term insurance calculator online and get the estimation of the premium sum that you might end up paying. Buying a term plan online is beneficial that you avail the plan at a special price compared to when the same plan is bough offline. Compare the various term insurance, features and benefits and choose the best term insurance plan right from the comfort of sitting anywhere.

7: Future of the Policy

It is also important to understand the finer points of the term insurance plan and if required you can always get into touch with the customer support service of the insurance company and get your queries clarified. Besides, take into consideration the offered exclusions within a term insurance plan. This is important so that your family is not surprised by later when they need it.

The Bottom Line

Undoubtedly, buying the term insurance plan is a crucial decision and should be done carefully. A term plan will take care of the financial needs of the family but also help them to accomplish future objectives.

It is one of the most sought products wherein your life will be insured till you pay the premiums timely. So even if tomorrow you are not around, the insurance company will pay out the lump sum amount to your dependents that will stabilize them in terms of finances and also enable to pay off any liabilities, if any. Most importantly discuss all the information with your dependents specifically your life partner and your parents so that they are aware in regards to the same. Also, the information provides needs to be accurate so that there is no discrepancy at a later stage of life.

Buy the best term insurance plan online, so that your family need not face any sort of financial hardship in case of your absence.

Written By: PolicyBazaar - Updated: 04 November 2020
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Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.
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