By Apoorva Mandhani
Buying term insurance these days is like that ambitious trip to the mall to find that perfect pair of shoes – that God-sent pair that would go with not just your distressed denims but also with that gorgeous dress you just bought. However, your dreams come crashing down as soon as you set your eyes on the sheer variety of options before you. Do you buy those wedges, which will be comfortable to walk the long distances? Or do you buy those sky-high stilettos, that would cater to your instant need of looking perfect for that date? Adding to the woes, you can never be sure of how the heels would actually make your feet feel when you begin relying on them for that graceful strut. Well, the scenario is, of course, different, when you belong to the ultra-rich society. In that case, you can buy as many shoes, in as many colors and styles as you want. But that’s not the point here. The point is that you never really know how wrong the fit is until you come home with blisters and aching feet.
Oft times, the saga doesn’t end on a more positive note when it comes to buying a term insurance policy. The market currently is flooded with umpteen number of options. This, more often than not, leaves prospects flabbergasted. They either procrastinate on the entire idea of having to opt for one or end up picking the wrong fit. However, with insurance too, you never understand how hard you’re falling until you smack into the ground. Therefore, the only way to harmlessly step out of an incorrectly fitting insurance policy is to never step into one.
Term Insurance: The hows and whens
For the uninitiated, term insurance is essentially a life insurance plan that guarantees payment of an assured sum to your loved ones in case of your unfortunate demise. It will help you protect your family and will take care of their financial needs in your absence. Here’s how and when opting for a term insurance can prove to be a smart decision for you:
- Term insurance plans are known for their cost-effectiveness. So, a 25-year-old non-smoking male can get a cover of Rs. 1 crore for a premium as low as Rs. 600 to 700 per month.
- As a thumb rule, individual insurance cover should be at least around eight to ten times your gross annual income. Further, while choosing a term insurance, it becomes necessary to be certain of the time you require the cover for. This is because a term insurance policy must cover a person till the age he wants to work.
- The premium, however, increases with age. Therefore, it is advisable to purchase a term plan as early as possible.
- Besides, term insurance is a great tax-saving instrument, allowing deduction under Section 80C as well as Section 10(10)D of the Income Tax Act, 1956.
- Also, take inflation into account while determining the amount of cover, as a cover of say, Rs. 60 lakh, may not be sufficient for your dependents to survive on 10 years from today.
However, while you must ascertain your needs as well as your family’s before opting for a term insurance, there are a few plans that do stand out. For instance, Max Life Online Term Plan Plus seems relevant for everybody — from single individuals to young couples to parents — and provides coverage against death, disability and disease. The plan offers some unique features like:
- Option to enhance life cover at important life stages like marriage, childbirth or purchase of home loan with additional premium;
- Coverage till up to 40 critical illnesses;
- Additional protection in case of death or dismemberment from accident by buying the Comprehensive Accident Benefit;
- Add on benefit with waiver of premium rider which allows waiving of all future premiums in case of critical illness, disability or death;
- Option to pay the premiums only during your working years. So, you can pay the premium until the age of 60 years for coverage until you turn 75.
Max Lifes Online Term Plan Plus is, therefore, a 10 on 10 plan, while still being affordable. For instance, a vanilla plan offering an Rs. 1 crore life cover can be bought for a 30-year term by a 28-year-old, non-smoker male at a premium rate of Rs. 563 per month.
KYI: Know Your Insurer
While a one size fits all term insurance is difficult, if not impossible, to come by, it also becomes imperative to ascertain the reliability of the insurance company that you opt for, much like the faith you pose in those Steve Maddens. A good measure of such reliability is the “claim settlement ratio”, which apprises you of the number of policies that have been settled by paying back the claims in case of death. Such ratio, along with related data, provides an objective yardstick to consumers to determine the trustworthiness of their insurance providers. This information can easily be accessed through annual reports published by the Insurance Development and Regulatory Authority of India. For instance, having maintained a claim settlement ratio of over 97.81% for 3 years now, Max Life Insurance fares as one of the most reliable insurers in the country.
With these pointers in mind, you are bound to chance upon that perfect fit of a policyone that would not leave you with blisters and regrets but would give you the courage to take on the world, much like that perfect pair of shoes.
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Photo by Jaclyn Moy on Unsplash