Top tips for buying the best term insurance plan
Life often comes with unpredictable events without any warning. A term insurance plan safeguards your family as it acts as a cushion for your family’s financial security against such unanticipated scenarios. Term insurance plans are very basic insurance plans where the insurer will offer a sum assured upon the policyholder’s death. These days, a plethora of insurance companies are embracing clients with different types of term insurance plans. However, if you want to buy term insurance to enhance the security of your family, then it could be an uphill task as the options are endless.
Before buying term insurance online or from a company, you should contemplate certain factors to understand what makes one different from another.
8 Factors you should consider while purchasing a term insurance
- Look into claim settlement ratio
- Compare different insurance quotations
- Select the right term insurance coverage
- Time Duration
- Check out for term insurance rider benefits
- Dependents
- Discounts Offered
- Customer Reviews
1. Look into claim settlement ratio
This is a quintessential parameter that will tell you about the insurance provider and its type of term insurance By going through IRDAI’s Annual report, you can find out the claim settlement ratio of various term insurance companies. To know more about the insurance company, you can visit the official website and get an idea about how many claims they have settled in a year. It would be prudent to choose a company that has a high claim settlement ratio.
2. Compare different insurance quotations
Before making any commitment, consult with two to three insurance companies and get quotations for various term insurance plans. Once you have all the term insurance plans with you, compare them and choose the best one that satisfies all your needs, including the policy period, budget, premium, and coverage.
3. Select the right term insurance coverage
Based on your family’s financial needs, you should calculate your term insurance coverage with a term insurance calculator. Though many people prefer the basic thumb rule for buying term insurance, i.e., 15 to 20 times your annual salary, this may not go well for all. The threshold can vary from person to person. For someone, 1 Cr. would be sufficient, while even 2 or 3 Cr. may also be inadequate for others. So, depending on your salary, dependents, and future financial plan, go for the right term insurance coverage.
You can choose the right term insurance coverage with the help of this simple formula.
Term insurance cover = [family’s lifelong expenses (including inflation till retirement) +expenses on future goals + loans/debts]-savings
4. Time Duration
Duration plays a pivotal role while selecting the best term insurance plans for your family. If you are looking for lifelong protection for your family members after your demise, then a whole life insurance plan could be the utmost choice for you. This type of insurance plan will offer benefits when you live and even if you die tomorrow. But if you are looking for an insurance plan for a shorter period, nothing can be better than a term insurance plan. For example, if you want to save some amount for your children’s education, then purchase term insurance for 15-20 years and choose an insurance company that offers the same. It will be a wise decision if you are buying a term insurance plan at a young age because, in this way, you can accumulate more savings.
5. Check out for term insurance rider benefits
You can uplift your term insurance coverage with rider benefits like waiver of premium, accidental death benefit, disability rider benefit, and critical illness rider benefit. Though benefits vary from company to company, you can choose the one that satisfactorily meets all your needs and requirements.
- Additional cover for death due to accident: If you die due to an accident during the policy tenure, this amount would be paid to you in addition to the basic sum assured.
- Cover for critical illness: Suppose you are diagnosed with one of the diseases that has been mentioned as a critical illness in the policy, the insurer will offer a humongous amount to the policyholder.
- Waiver of premium on disability: If the policyholder becomes permanently disabled during the policy tenure, the future premiums for the policy will be laid off.
6. Dependents
If you are the only earner of your family, then purchase a term insurance plan to secure the lives of your family members. Then, in case of your sudden demise, they may not face any financial difficulties if you have purchased term insurance. By analyzing the number of dependent family members, you can choose a term insurance plan that covers the most.
7. Discounts Offered
As technology is penetrated in every sector, insurance companies also use the benefits of technology and encourage customers to purchase various term insurance plans online. So, before buying term insurance online, check the discounts offered by the insurer to allure the customers.
8. Customer Reviews
Check out the reviews of the customers and see what they have said about the customer service and claim settlement services.
Don’t get perplexed while choosing the best term insurance policy for your family members among so many options. The above-mentioned tips will guide you to choose the right term insurance policy from a renowned insurance company.
