Insurance is one of the priorities of every individual today. It is an integral part of your financial planning. A life insurance plan safeguards your family’s security against the uncertainties of life. The importance of a term insurance plan does not need any exaggeration.
However, when it comes to buying a term insurance cover, we often get confused while making a decision. This happens because different insurance companies provide different features and benefits on their term insurance plan.
There are some important things that you should always keep in mind before buying a term insurance plan to select the best one.
Tips for Buying the Best Term Insurance
- Claim Settlement Ratio: Claim Settlement Ratio is the numerical value representing the number of claims settled against those filed. Higher the claim settlement ratio, greater are the benefits of availing term insurance plan. An insurance company should have an effective claim settlement process for client satisfaction. So you should always buy a term insurance plan from an insurance company that has a good claim settlement ratio and a healthy record of customer orientation.
- Quantum of Life Cover: it is very important to choose the amount of term life cover that is the best for you. Ideally, you should have a cover which is at least 15-20 times of your yearly income. Income is the major determinant of your life term cover but not the only one. While determining the amount of life cover, you should also keep in mind the number of dependent family members and other financial responsibilities that will keep increasing with time.
- The Term of the Policy: A term plan provides benefit to the family of the policyholder after his death. So a term insurance cover should not be taken for a shorter duration of time as it will end early and will be of no use. Long-term insurance covers that may extend up to 60-65 years of age are beneficial. A person’s needs are the highest at this age. Ideally, it should be up to your retirement age. The term of the policy should not end when you need it the most.
- Riders that Maximize your Coverage: Apart from the death benefit offered by a term plan, some term plans offer additional cover in the form of riders. Riders like waiver of premium cover, disability cover, loss of employment cover, can be added by paying a small amount of added premium. You should analyse the riders offered by different insurance companies before buying a term insurance plan. But you should also keep in mind that riders are an add-on feature and should never be given priority above the basic features of the term insurance plan.
- Provide Correct Details: An insurance contract is always based on the principle of good faith. If your insurance company gets to know that you have given wrong information in the policy form, the insurance contract becomes null and void. The term insurance premium is influenced by your lifestyle habits and medical conditions. But concealing medical problems or lifestyle habits like smoking or drinking for availing lower premium can lead to claim rejection in future. Insurance claims often get rejected on the ground of incorrect information.
- Premium Payment and Renewal: Insurance companies offer different options for premium payment. The annual premium option is the cheapest while the monthly option is the costliest. Whatever may be the payment periodicity, you should always ensure that you do not miss on paying the premium. To ensure timely payment, you can give instructions to your bank or credit card provider for paying the premium on the due date.
The Bottom Line
Now that you know the tips for buying the best term insurance plan, go ahead and choose a plan suitable for your family’s future.