Life insurance is a financial tool that acts as a protective cover for your loved ones and helps secure your own future. One of the most popular life insurance schemes is term insurance. Before you look for the best term insurance policy, it helps to understand what term insurance is.
Term insurance is a type of policy that covers the individual for a specific term, and in the unfortunate event of the persons death, benefits are given to the nominee. A term plan is called a pure protection plan, and its structure is simple. So, how does one go about choosing the best term plan? Read on for a five-step methodology to choose one.
- Do your research and compare term plans
One of the first things to do when you choose the best term insurance policy is to compare the various plans and look for features and benefits. Look for plans that are customisable and flexible; for instance, some term plans offer payouts as lump sum but also allow you to take a portion of the payout as lump sum and the remaining as monthly income or increasing monthly income. Also, check out which term plan offers the most affordable premiums at the highest sum assured. When you compare plans, look for the ones that offer spouse cover under the same policy. Choose the plan that suits your needs after assessing your situation; not all benefits are needed for everyone and not all plans are for everyone.
- Choose the right term
Choosing the best term insurance involves getting the policy tenure right. Buy a plan that covers you when your need for insurance is greatest — this means you take into account whether you are married, single or have a family/likely to start, and plan accordingly. Buying a term insurance policy when you are young helps you save on premiums; the older you are the premiums increase. There are plans that offer coverage for till the age of 99 years.
- Look for riders
Riders are add-on benefits that your term plan offers. Look for riders such as accidental death benefit, serious illness cover, critical illness benefit or accidental disability benefit. These riders allow you to enhance the value of your term insurance policy — choose them after taking into account your needs, health situation and the familys economic situation.
- Get life stage protection
Look for benefits such as life stage protection where you can buy additional cover at different stages without medical examination. These life stages could be your marriage or the birth of your children. This is an important option to have as you can increase your coverage when your financial commitments grow. This means you dont have to worry about looking for appropriate insurance plans later — the option is already with you and it saves time and effort.
- Buy online
Wondering how buying term insurance online matters? If you are looking for the best term plan, it is not only easy and effortless to buy online but also more affordable. Online term insurance policies are much more affordable than offline ones. Buying online also saves you time and effort and whats more, once your policy is approved, it lands in your inbox; you dont have to run around for it.
Points to consider before getting term insurance
Now that you have the five-step methodology handy, its time to choose the best term plan and enjoy the benefits on offer. Here are some quick tips you could use before you go ahead:
- Make sure you have your documents to prove age, income and identity at hand.
- Experts suggest that your cover should be ten times your annual income, so your familys financial needs are covered adequately.
- Check the claim settlement ratio of the insurer before buying. This is the ratio of the number of claims that have been raised to the number that have been settled and gives you an indication of the insurers efficiency.
- Also, look for solvency ratio; the IRDA has it that this ratio should be a minimum of 1.5. The ratio indicates the ability of the insurance provider to settle claims.
Conclusion
Term insurance is a pure protection plan thats among the most popular forms of life insurance policies. Getting a term insurance policy online is easy and affordable. Compare the features such as policy tenure, sum assured and premiums before getting one. The best term insurance policy offers you additional benefits and riders that you can choose to cover your and your loved ones needs.