Being one of the simplest forms of life insurance products available in the market, term insurance is a popular choice of insurance buyers when it comes to securing the financial future of the family. But as an insurance buyer, it is important to understand that purchasing term insurance is not only about paying the premium and expecting a secure future for the family. It is important to understand the product well and consider a few important aspects of it before making an informed choice.
Further in this article, we have elaborately discussed the important aspects that you should keep in mind before buying an appropriate term insurance plan for your family.
Check for the Company Details
Before zeroing in on a term insurance plan, it is imperative to choose a reputed life insurance company. With different insurance companies providing an extensive range of term insurance plans, it becomes very difficult to decide which insurer is reliable and provides the best service as compared to the others. Thus to choose the best plan as per your requirement and suitability it is always advised to compare various plans online. By comparing the quotes of different term insurance plans at Policybazaar you can choose the best suitable plan which provides higher coverage at a minimal premium rate. Also, don’t forget to check the Claim Settlement Ratio (CSR) of the insurance company, so that you can have a clear idea of the customer service of the company.
Check the Claim Settlement Ratio of the Company
Checking the claim settlement ratio of the company is probably the most important thing to do while purchasing a term insurance policy. The claim settlement ratio indicates the % of claims settled by the insurance company by the total number of claims received in a year. Go for the insurance company which has a higher CSR. This will reduce the risk of claim rejection and your family will not have to go through the unnecessary inconvenience while getting the claim settled. Higher the claim settlement ratio of the company is higher the reliability of the insurance company is.
As per Your Requirement Choose the Right Term Insurance
It is very crucial to evaluate your requirements and needs before deciding on the term insurance plan. You can choose to purchase different variants of the term policy as per your requirement.
– Level Term Plan – this is the most common type of term insurance policy, where the sum assured is fixed for the entire tenure of the policy and the benefits are paid as a death benefit to the beneficiary of the policy in case of uncertain death of the insured person during the tenure of the policy.
– Term Plan with Return of Premium (TROP) – TROP plan comes with the perk of the death benefit as well as survival benefit. Under this plan, the entire premium of the policy paid to date is returned to the policyholder as survival benefit if the insured survives the entire tenure of the policy.
– Increasing Term Plan – Under this plan, the sum assured of the policy increases automatically annually, while keeping the premium amount intact.
Add Rider Benefits to Base Plan, If Required
Besides the basic insurance coverage offered by the term insurance plan, many term insurance policies also offer add-on benefits as riders to increase the coverage of the policy. These riders can be added to the base plan if required by paying an extra premium to increase the policy coverage. let’s take a look at the common rider benefits offered by the term insurance plan.
– Accidental Death and Partial and Total Permanent Disability Rider
– Accidental Death Benefit Rider
– Waiver of Premium Rider
– Critical Illness Rider
– Income Replacement Rider
If required, you can choose any of these riders to avail of the extra benefit offered by the plan. However, make sure that you understand the inclusion and exclusions of these riders before including it in the base plan.
Consider Future Inflation
This is one of the major factors, which is often overlooked while buying a term insurance plan. Factoring the future inflation of the future value of money is very important to take into consideration while buying a term plan. This will ensure that the term policy you purchase will stay relevant for the entire policy duration.
Thus, as a buyer, you should evaluate your needs and make a decision as per your requirement. As a basic thumb rule, it is advised to purchase insurance coverage 10-12 times of the annualized income so that it can beat the inflation. by considering future inflation, you can choose adequate coverage that will be sufficient to take care of the liabilities of the family in the future even in your absence.
Wrapping it Up!
No matter whether you are single, married, have a child, or have a retired parent to look after it is important to have a financial backup and secure the financial future of your loved ones. Make sure that you consider these points thoroughly while purchasing an appropriate term insurance plan for your loved ones.
