What to Consider While Buying a Term Insurance Plan?

You know the advantages of availing a term insurance plan and its role in securing financial well-being of your family. The core purpose of term life plan is it serves as a safety net for dependents in case of death of the breadwinner. 

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What to Consider While Buying a Term Insurance Plan?

Let’s discuss some of the important factors you must consider while availing a term insurance plan:

Determine policy coverage:

While availing a term insurance policy, make sure to access policy coverage. You must evaluate the lifestyle expenses of your family, liabilities and debts as well as education expenses of your children, number of dependents and so on.

You must at all costs, avoid the mistake of underinsuring your family, as it defeats the purpose of term insurance. You can also use online premium calculator to calculate term life insurance premiums.

See Also: What is a Term Insurance Plan?

Access your needs and budget:

While selecting a term life plan for yourself, consider factors like monthly income and the amount of money necessary for your family to maintain a decent lifestyle. Avail term insurance as early as possible. At this age, you generally do not suffer chronic ailments. This will help you avail a policy at minimum premiums. There are also special discounts for non-smokers and non-drinkers on premiums.

Choose the right insurer:

The most important step while purchasing a term insurance plan is to choose the right insurer based on the following factors:

• Claim settlement ratio: The claim settlement ratio shows the number of claims settled by an insurance company vis-a-vis the number of claims filed by the policyholders. A claim settlement ratio of 97% means the company is customer-friendly and has settled a large number of claims. It is advisable to go with an insurer who has high claim settlement ratio, to make sure your dependents receive the death benefit without any hassles.
• Solvency ratio: The solvency ratio shows the financial stability and the goodwill of the insurer. It shows the insurer’s ability to fulfill both short-term and long-term liabilities.

See Also: How Much Term Insurance Should I Buy?

Choose the policy tenure:

The insurer allows the policyholder take advantage of the various terms offered. The policy holder can avail the policies for various terms as per budget and financial liabilities. The insurance company offers policy tenure ranging from 5 years to 40 years. The tenure you choose determines the benefits and premium amount. It is always beneficial to opt for the longest insurance cover i.e. up to the age of your retirement to remain stress-free and avail greater benefits.

Consider inflation as an important factor:

While availing a term life plan, make sure to consider inflation. The coverage that you choose today; might not be adequate for the future.

See Also: What is a Term Life Insurance Policy?

Make a conscious decision:

There are various types of term insurance plans available in the market today. Before buying a term plan make sure to do thorough research and compare the policies in terms of features, types, policy terms, riders and benefits. You can also use an online calculator to check the monthly premiums and request for a term life policy quote. Make an informed decision by carefully evaluating the policies and choosing the best insurer, based on your monthly income and your personal requirements. 

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