Easy and essential steps to choose the right term insurance plan for yourself
At a young age, we often ignore or delay planning for our future. But mishap can happen anytime in life which every one of us needs to manage sometime or the other. Moreover, as we move ahead in our lives, numerous changes take place that further brings several responsibilities. Thus, having a back-up plan that offers financial security to your family in your absence is mandatory.
In such a case, Term Life Insurance can be a good option to protect your loved ones from facing financial hurdles when you are not with them. There are many insurance providers in India which offer several term protection plans customised to cover an array of circumstances. However, the main challenge is to choose the right term plan and insurer. Hence, it is critical to assess your necessities and follow certain procedures which can help you in picking the best term life insurance for yourself.
Evaluate Your Needs: The first thing that you need to do while purchasing term insurance plan is assessing your needs. Calculate the coverage amount that you think your family will be comfortable in your absence and then look for your preferred term plan accordingly.
Term Insurance Premiums: Premium is a significant influencing factor for buying or not buying a term insurance plan. Premiums charged for the term insurance policy are not the same for every insurance company. However, the pricing cannot define the efficiency of an insurance policy. For instance, a term plan with high premium does not mean that it offers the best features, whereas the one with a low-cost premium does not provide any benefits. Therefore, do not let the pricing of premiums influence you completely. Compare various term plans, and select the right one which you can afford, suit your requirements, offer the best coverage and benefits.
What kind of term insurance plan you should select: As you grow in life, your financial status also changes. Hence, you should pick term insurance policy considering these changing circumstances and needs as a primary concern. Here are the four different kinds of term plans and how they might be useful.
Level term plan: This is a regular term life insurance wherein the premiums remain fixed throughout the tenure of the policy.
Increasing term life insurance: In this kind of term insurance, the coverage amount gets increased by a pre-set percentage to deal with the rising costs due to inflation.
Decreasing term life insurance: There are various liabilities at different life stages. Such as at a young age, you might have the obligation of loan repayments, aged parents, siblings, and if you are married, then children. However, with time your children, siblings become independent to support themselves, and you also get over with your loan repayments. This implies you have lesser wards to take care of and will consequently bring down your financial inclusion needs. Therefore, decreasing term life insurance is perfect for such circumstances as the insurance sum assured amount get reduced by a fixed percentage every year.
Monthly payment plan: Under this plan, the coverage amount is paid out monthly, so that the dependants can manage their regular expenses.
Term Insurance Riders: Apart from death, there are several other uncertainties like accidents, illnesses, mishaps that can knock your door at any time. These can hamper your dependant’s financial condition in your absence. A rider is an extra advantage which shields from such dangers and can be joined to the base insurance policy by paying some extra in the premium. While selecting an insurer, consider the one which secures you with different rider choices. Some of the popular riders are critical illness rider, premium waiver rider, disability rider amongst others.
The reputation of the insurance provider: Another significant factor which must be viewed while buying a term insurance plan is the reputation of the insurer. This can be verified by checking the claim settlement ratio of the insurance company. Claim settlement ratio is basically the complete number of cases claimed versus the number of cases settled by the organisation. For instance, if an insurer has received 100 claim cases, out of which 90 they have settled then their claim settlement ratio is 90 percent. This is a significant marker of the organisation’s intention for paying claims. The other ways to check the credibility of the insurer are by looking into their solvency ratio, assets under management (AUM), corporate governance record and the number of occurrences when the company has violated the rules laid by IRDAI.
The convenience of buying term life insurance: Nowadays, comfort is something which everybody needs. With regards to purchasing term insurance plans, customers presently search for term insurances which not only can be bought online but can also be accessed online anywhere and anytime.
Purchasing a term plan is inevitable but picking the right one is quite a tricky task. These steps are simple guidelines to help you to select the best one for yourself. You can visit BimaKaro.in if you are planning to buy a term life insurance. Compare various term policies and buy the most suitable one that offers complete protection for your family.