Do you have dependents? If yes, you must have term life insurance. Why? Term insurance is a type of life insurance plan, which offers financial protection to dependent members of your family.
This is a pure risk plan. The insurer makes the payout if the policyholder dies within the term of the plan. The beneficiaries enjoy the death benefit. Term Life plan has no survival benefits.
Whatever premium you pay for buying term insurance is used only for covering risk. There are different types of term life plans out there and you must choose the best term life plan which meets your financial goals.
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The answer to this question varies across individuals. The term of your policy depends on age, marital status and family size. More importantly, the number of years you work also matters.
Most insurers offer a minimum term of 5-10 years. Term insurance needs to be renewed after the completion of the policy term. If you renew the policy post the due date, the premiums would rise. When you opt for a long-term policy, the premiums shall be lower. Make sure you have term life plan across working life.
People randomly choose a cover. This is wrong. The ultimate goal of term insurance policies is to make sure that family members continue to enjoy a financially secured life in the unfortunate event of the death of the policyholder within the term of the plan.
Understand the financial needs of your family. Take into account the following aspects while choosing the cover:
So, is a sum assured of Rs 25 Lakhs or Rs 50 Lakhs enough? Why even a sum assured of Rs 1 Crore may not be enough?
See Also: Best Term Insurance Plans In India
Should I pay term life plans quarterly or monthly or annually? The premium to be paid depends on the sum assured. In general, paying annual premiums is cheaper. Check income and expenses and then decide when to pay term life premiums.
Insurance companies offer riders along with term insurance policies. Riders cover permanent disabilities or critical illnesses that might occur during the term of the policy.
If the policyholder is diagnosed with cancer or kidney failure or stroke or paralysis or coronary artery bypass graft, the critical illness rider proves handy. Include riders to get additional benefits.
The death benefit is paid to the beneficial nominee on the untimely demise of the insured. Insurers have a number of payout options.
When you choose the lump sum payout option, the whole sum assured is given at once and when you choose the monthly income payout option, the sum assured is paid in the form of monthly installments. Choose the payment option according to your needs. If your family members find handling money difficult, opt for monthly payout.
See Also: Benefits of Buying Term Insurance Online
Claim settlement ratio is an important consideration. It is a ratio between the number of claims filed and the number of claims settled. Choose an insurer who has high claim settlement ratio as it is a mark of credibility.
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