If you are among those who start fretting at the thought of dealing with financial plans, you don’t have anything to fear about. Unlike many insurance and investment alternatives, term insurance is simple and easy. You know the premium amount which you will pay for next 20-25 years (as per your requirement) and you know the lump sum amount which your family will receive in case of unfortunate demise of the policyholder.
The first and foremost thing most of us like to compare, when looking for a term insurance policy is the premium. Yes, the premium is a crucial thing but if you are giving a lot of emphasis on it then you might have to compromise on the financial security of your family. But with Term Insurance you don’t have to compromise on anything. It provides you with the benefit of best-in-class life insurance cover at an affordable premium.
For ensuring that the future of your family stays unaffected, listed below are few important things which will help you to go about buying a term insurance plan.
Understanding Term Insurance
Term insurance is designed for providing a pay-out only in case of a demise. It’s not an investment option and won’t give you returns. The good thing about term insurance is that it is low cost, however, you don’t receive a pay-out, meaning you’re living and kicking!
Defining your requirement
In case you have any outstanding loan and don’t want to push the burden on to your family member’s shoulders in your absence, term insurance is the best option for you. Alternatively, you would be earning an income which supports your family or your lifestyle. You certainly don’t want your family to compromise on their lifestyle or find difficulty in sustaining a good life in your absence. You can do them a big favour by getting yourself a term insurance cover.
Choosing plan that you can afford
Once you have assessed your term insurance requirements, determine how much it would cost you with respect to the annual premiums. Before buying a term insurance policy, check whether you would be able to afford the premiums for the entire term of the policy. A term insurance plan would suit you since it is cheaper.
The best thing about term insurance plans is that these plans are designed to charge the same premium throughout the insurance term even though the risks increase when you grow old. Fundamentally, in case you start young and go for a term insurance for a long period you would be paying a level amount across the insurance period. However, you could reassess your insurance requirements every 4-5 years and increase the cover as required.
Selecting the Nominee
Naming your beneficiary is very crucial. It should be a person who shall need your money the most after your passing. It can be your spouse, your parents, or your child. It is advisable to keep your beneficiary informed about the key features of the policy and any changes that you decide to make.
Assess the future of the insurance plan
Buying an insurance policy online after reading the policy brochure for understanding the intricate points can be very beneficial. For instance, exclusions – events which aren’t covered by the insurance policy are crucial. It is important to know them before you purchase any term insurance plan so that you don’t leave your dependents with various issues relating to your term plan.
Checking the claim settlement history
Opt for an insurance policy from which your dependents will receive the promised benefit from your chosen insurance company. Just how an insurance company authenticates your insurability, verify the claims payment ratio of your chosen insurance company. It won’t take you much time in doing this research. The IRDAI (Insurance Regulatory and Development Authority of India) provides such claims related data on its website. The insurance company could have rejected few claims but you should check the causes behind such decisions. Insurance companies will not process a claim which is fraudulent.
With several insurance companies providing online term insurance plans, deciding upon which one to opt for can be difficult. However, if you consider the above-mentioned things when you’re zeroing in on a term insurance plan, you can certainly find the right term insurance plan for yourself.