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Your Guide to Term Insurance

IndianMoney.com Research Team | Updated On Wednesday, October 09,2019, 05:46 PM

2.2 / 5 based on 11 User Reviews

Your Guide to Term Insurance

 

 

Staying financially prepared for any situation in life is the best way to mitigate financial risks and provide financial security to your family. But what would happen if your life is at risk and there is no one left to financially support your loved ones?

Well, term insurance plan helps you to mitigate these life risks. If you want to support your family even after your demise, then you must invest in a term insurance plan. If you have dependents, then a term plan is an ideal investment. It helps your beneficiary get a lumpsum amount in case of your unfortunate demise within the policy tenure. But to keep your policy in force you must pay your insurance premiums and renew your policy on time to get the benefits of the term plan.

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Your Guide to Term Insurance

what are the Types of Term Insurance Available in India?

Right now, the market is flooded with a range of term insurance plans. Several insurers have also launched term plans that can be customized to cover a variety of circumstances.

With so many options, how do you choose the best term plan?

You must keep in mind that term plans can be classified into four basic categories.

  • Level term plans
  • Increasing or decreasing term plans
  • Returns of premium term plans
  • Monthly income plans

Any term insurance plan will come under any of these types. So, it is important to identify your requirements and choose a plan that suits your needs the best. This way you can efficiently plan for your family’s future and modify your policy to give the best coverage to your loved ones.

See Also: Why You Need A Term Insurance Plan?

What to Keep in Mind While Purchasing a Term Insurance Plan?

Purchasing a term insurance plan can be a little tricky when you have so many options flooding the market. Therefore, while comparing various plans online, make sure you check the below-mentioned points to get the best deal. You must scrutinize whether your term plan offers the following features:

  • Sum Assured: The sum assured is the amount paid to your dependents in case of your unfortunate demise. Make sure the sum assure of your policy is enough to take care of the expenses of your dependents. Most people often remain underinsured leaving their families in financial trouble after their death. Good insurance coverage will give your dependents the freedom to live life on their own terms.
  • Maturity Age: The age of maturity is a crucial factor that decides your insurance premiums. Choose the policy maturity as per your liabilities. If you are an active earning member of the family and need extended coverage, then you can opt for a policy maturity at 75 years.
  • Claim Settlement Ratio: You must make sure your family gets the financial help after your death. You must always choose the insurer based on the claim settlement ratio of the insurer. The claim settlement ratio is a kind of guarantee that your insurer is customer friendly and settles the insurance claims without hassle.
  • Riders: the added benefits that come with your insurance cover comes in the form of riders. Riders allow you to increase your policy coverage and secure your family in a better way.  Some rider allows you to get an added amount along with your basic insurance cover. So, choose your policy and rider carefully.
  • Health Checks: Most of the insurers ask the policyholders to take up medical tests while buying term insurance plans. Do not bypass such tests as it may help to reduce your insurance premiums. A pre-policy medical check-up means you pay only for the pre-existing conditions you have. It also helps you identify the amount of coverage you need.
  • Choose the Payout Mode: Currently, some insurers are providing the option of lumpsum payment option as well as income replacement options. A lumpsum payment can lead to disastrous consequences if your nominee is not very well equipped with managing finances. In such cases, you can choose an income replacement payment where your nominee will receive a portion of the lumpsum and thereafter a monthly income for a fixed tenure.

See Also: What is a Term Life Insurance Policy?

How to buy a good term insurance plan?

Term insurance is a promise by your insurer that your family will be secured and protected if something happens to you. So, you must choose an insurer who has a good market reputation and can keep these promises at times of trial. Choose a plan that comes from an insurer that has a high claim settlement ratio.

You can make the purchase from any online aggregator or directly through an insurer. However, it is advised that whenever you make a purchase consider some additional factors like corporate governance record, assets under management and solvency ratio to make sure the claims are honored in your absence.

To secure the future of your dependents it is important to invest in a term plan. Term plans are not only easy on your pocket but also assure peace of mind for you and your dependents.

See Also: Benefits of Buying Term Insurance Online

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IndianMoney.com Research Team

The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.

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