Top things to keep in mind before buying a term insurance plan
Buying a term insurance plan is not a big deal. You get ample options in the market as several insurance companies sell various term insurance plans. However, the question is, are you choosing the right term plan according to your requirements?
Raju, a 35 years young man, just started his family and has to support his elderly parents, wife, and newborn baby. He has a huge responsibility of giving a quality life for his family forever and throughout their life span. He is earning a good income of over Rs 10 lacs per annum and owns a home too. But, he was thinking of buying a term insurance plan online, understanding the uncertainty of life. But, Raju did not have much time to analyze or research the term plans and randomly pick some plans from the options he found online.
Is this the right way of buying your term insurance plan?
Will this help you choose a perfect plan that can give complete security to your family in your absence?
The answer would be no.
So, what do you need to do to buy a reliable and safe term plan for your family? The term insurance buying guide will help you meet your expectations in this regard.
There are a few essential things that everyone should keep in mind before shopping for a term plan. If you are looking to buy a term plan, but have no idea about the elements you need to keep in your mind while buying, then this term insurance buying guide can help you hugely?
Top 10 Factors to consider while buying Term insurance Plan
- Cover Amount
- Term Period (Long or Short)
- Current Life Stage
- Check out the Charges
- Claims
- Stay Informed
- Premium Amount
- Payout Options
- Reliable Insurer
- Nominee Name
1. Cover Amount
First, you need to check out the cover amount you require. This cover amount should be enough to support your family to meet their financial needs after your absence. Therefore, try to determine a reasonable cover amount. However, the higher the cover, the higher will be the premium for your term plan. Similarly, the cover amount will also be determined based on your age, financial responsibility, family lifestyle, basic family expenses, present active loans, and the rise in the cost of living.
2. Term Period (Long or Short)
The longer the term plan, the longer is your cover period. If you are young by the age of 30 years, you can certainly try to consider a long-term period for up to your age of 75 or 80 years. In this case, the premium amount you pay for your plan will also be lower with a high sum assured amount.
3. Current Life Stage
Your lifestyle and life stage correlating with your income might not be the same as the years roll on. It keeps changing, and over the decades, your life stage might have improved much better. However, alongside your financial needs and commitments might also have grown up. Therefore, if you are planning to buy a term plan today, then you should certainly consider your future life and family requirements and decide your sum assured, term period, life cover, and other elements accordingly.
4. Check out the Charges
The charges for a term plan may vary with the insurance company and the type of insurance plan you choose. Therefore, you need to check out the charges involved, as they might also influence your premium amount.
5. Claims
Try to understand the claim aspects and the claim settlement process a company would follow. Try to check the speed and quality of claim settlements that a company is processing. Higher the claim settlement ratio, credible will be the insurance provider and ensures that you are in the safe hands.
6. Stay Informed
Try to keep yourself aware of all servicing options that an insurance company offers. Try to check out the networks, branches, digital platforms, and any other similar information that you should know before buying a term plan.
7. Premium Amount
This is very important to keep in your mind while buying a term plan. The higher the sum assured, the higher will be the premium amount. First, you need to check your paying ability. If you feel that you can manage to pay the premium amount you choose today, then it’s ok, but at the same time, the future is unpredictable. Therefore, at any point over the years, you might face a situation where you cannot pay a considerable amount of premium. This may lead to default in the insurance and thus lapse. To avoid this, you need to be very specific about the premium amount that you can afford to pay at any point in your life.
8. Payout Options
The payout option can be chosen as a lump sum or on a regular monthly basis. However, you need to opt for a flexible option to pay the premium amount as per your feasibility.
9. Reliable Insurer
Before you choose an insurance company, you need to ensure that the company is reliable and present in the industry for many years. A reputed insurance company will further reflect the trust that their policyholders have in them. However, you should also not get carried over with any false advertisements and attractive offers that an insurance company gives.
10. Nominee Name
This is the most crucial element you need to consider while buying a term plan. Try to be very clear about the nominee you want to appoint for your term plan. The nominee you choose should be responsible and a reliable family member who would take all the responsibility of safeguarding everyone with the settlement claim received.
The bottom line is choosing the right term plan is equally important as buying one. Hence, at the time of purchasing a term plan, keep these pointers in mind and make the right buying decision.
