Term Insurance | How to choose Term Insurance?

Term Insurance | How to choose Term Insurance?

Life is uncertain and life insurance can provide financial help to your family when you are no longer around them. Nothing can replace a loved one but advance planning with life insurance can make things easier for those you leave behind. So secure your family’s future today and make term insurance your best friend. All life insurance companies in India have term insurance policies in their bouquet of policies at competitive rates.

What is Term Insurance?

Term insurance is the simplest life insurance that provides full financial coverage for a specific time period. Term Insurance is the cheapest form of life insurance as it does not have any cash value. The term insurance policy comes useful only in case of death of the insured individual during the policy term. The death benefit is paid by the insurance company to the nominee who is usually a family member. Some insurance companies also cover permanent or partial disability wherein the policyholder’s regular income is disrupted. Thus, term insurance is the most basic and useful form of life insurance that you can purchase for your family security.

Why should you buy term insurance?

Term insurance provides a large cover at low premiums ensuring that your family can live the same lifestyle in the event of an unforeseen situation. If someone dies during his/her earning years, his/her family could suffer a huge economic loss. With the loss of a loved one, if the family is also left without money to meet their daily expenses and future needs, then the family has to cope with so many crises at the same time. In this situation, the term insurance policy provides financial help to the family. You will also get the peace of mind by knowing the fact that financial help will be available to your family when you are no longer around them. It is the real support that your family can have if something happens to you. Term insurance is important for everyone and especially more for the bread earner of the family.

Features of Term Insurance

1. Term insurance policy gives tax benefits.

2. Term plans offer high sum assured for a lower premium.

3. Some insurers offer rebates if policyholder opts for high sum assured.

4. You can select your policy term as per your requirement.

5. These policies also offer premium payment options.

6. Special premium rates for non-smokers and for those who maintain a healthy lifestyle.

7. Additional optional benefits such as critical illness, accidental death, permanent or partial disability and accelerated sum assured are also available.

8. The entry age in most of the plans is 18 years and persons up to the age of 65 are eligible to avail.

9. Death benefits are available to the person nominated at the time of policy agreement.

10. In case you survive the policy term then nothing is payable at the time of maturity.

How much Term Insurance should you take?

Term insurance is meant to provide financial help to your family when you are no longer around them. Generally, your term insurance should take care of daily expenses of your family, future expenses like higher education or marriage of the children and other liabilities if any. If the term insurance coverage is inadequate, it will defeat the purpose of life insurance. As a thumb rule, a person needs about 10 times of his/her annual income as insurance cover. This level of term insurance normally provides financial security to a family for about 10-12 years if the bread earner of the family dies.

What should be the duration of your term policy?

The duration of the term insurance policy is also as important as the amount of cover. Ideally, the duration of your term insurance policy should be equal to the number of years your family will be dependent on you financially. Hence, I would suggest tenure till your retirement age. Because once you retire then your earnings will stop and financial dependency on your income will also stop. Also for longer tenure, you have pay higher premium.

How to choose a Term Insurance plan?

The important factors that one must keep in mind while choosing a term insurance plan:

1. The reputation of the company: Company’s reputation and stability are very important factors in the life insurance business for the customers to trust. Hence, this must be your priority to choose a company, which you feel best in service.

2. Claim settlement ratio: Check the claims settlement ratio of the insurance company which is publicly available on the insurer’s website. This is the most important factor in selecting any term insurance policy. This information will tell you the percentage of the claims that the insurer has honoured.

3. Premium: Term insurance plans are popular because of the low premium amount you are required to pay. Hence, you must look for term plans which are cheap and affordable to your pocket. Certain plans provide you with discounts on the higher sum assured. Some companies also offer discounted premium rates for non-smokers.

4. Riders: Insurance riders offer you additional coverage on your term plan. The best term insurance plan for you is the one that has all the angles covered. One approach to accomplish this is through insurance riders. There are many riders available like accidental death, critical illness, disability, waiver of premium etc. You can select riders based on your needs since they add considerable value to the life cover.

5. Additional Features: There are several term insurance plans which come with an additional feature. Select the company which suits your plan requirement like age, the frequency of payment, critical illness expenses, enhanced cover etc.

Term insurance plans are very popular because they come with low premiums. You should choose a best term insurance plan for yourself considering the reputation of the company, claim settlement ratio, riders offered, additional features and of course the premium.

Also read: LIC E-Term Plan | Features & Benefits
Also read: Aegon Life iTerm Insuarnce Plan | Features & Benefits

Also read: Edelweiss Tokio Life - Totao Secure+ | Online Term Insurance Plan
Also read: How to set your Financial Life in order?

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Term Insurance | How to choose Term Insurance?