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When it comes to securing your family’s financial future, term insurance is an essential protection plan that provides financial security to your loved ones in the event of your demise. It is the purest form of life insurance that covers you and your family. The insurance provider covers you for a specific amount, also known as the sum assured, in exchange for a specified premium amount.
With multiple insurance providers out there, choosing the right policy for you and your family can be challenging. Let’s simplify this process for you and provide you with ways you can identify the best term insurance plan for you.
6 tips to help you choose the right term insurance plan
Here’s what you need to know when you’re scouting for term insurance:
1. Assess your coverage needs
This is the primary step in determining the best-suited insurance plan. Estimate your outstanding debts, liabilities, and future financial obligations, like your child’s educational expenses. Then, ascertain an adequate sum assured amount which will support your family in the case of an unfortunate event.
You can use the common thumb rule to calculate a minimum coverage amount. Aim for a coverage sum of approximately 10 times your income. For instance, if your current annual income is ₹10 lakh, you should consider having a cover amount of at least ₹1 crore.
This will give you a number to start with, helping you to choose the policy that will best suit your family’s financial needs.
2. Analyse the policy period
Opt for a coverage period that aligns with your financial goals and obligations. The policy’s term can depend on your life stage. For instance, if you have young children, you may opt for a longer term to ensure their financial security until they become financially independent.
3. Research insurance providers
Look for providers that have a good reputation and offer comprehensive coverage. Ensure you check their claim settlement ratio, customer reviews and rider benefits. A claim settlement ratio indicates how well an insurance provider settles claims, highlighting their trustworthiness. Therefore, insurers who maintain their claim settlement ratio around 95% are considered reliable and beneficial in the long run.
4. Compare the premium and offerings
Comparing different term insurance options of multiple insurance companies, allows you to find an insurance plan that meets your needs. Ensuring that the premiums are affordable and fit within your budget is also important. Look for companies that offer high coverage benefits at economical rates with features like flexible premium payment and payout options, etc.
5. Rider benefits
Riders are add-on benefits that you can add to your policy at an additional cost. Riders can enhance the coverage scope by providing protection against critical illness, accidental death or permanent or partial disability. You can opt for add-ons that align with your specific needs and complement your coverage requirements.
6. Review terms and conditions
Thoroughly go through the policy’s terms and conditions, including exclusions and limitations. Here, exclusions are specific circumstances under which the insurer will not provide coverage. Policies with clear terms and conditions provide assurance that there will be no surprises when it comes to making a claim, allowing you to move forward without any worries.
Bottom line
Choosing the right insurance plan involves careful and thorough evaluation of your requirements and liabilities. This is a long-term agreement between you and the insurer to secure your family when you are not around. Therefore, it is crucial to focus on the terms and benefits of the policy to make sure that it fulfils the needs of your loved ones in your absence.
