Key Points to Consider When Buying a Term Insurance Plan

A term insurance is a type of life insurance plan and is known to be its cheapest and purest form. Under this insurance plan, life cover is offered up to a pre-decided time period i.e. term. A customer can avail high term insurance cover amounts at very affordable rates. Although, the advantages of a term insurance are already in plenty, there are several ways in which a policyholder can enhance their coverage in order to avail optimum cover at lower premium rates.

Highlighted below are some of the factors that a policyholder must consider before buying a term insurance plan:

• Choose the Right Insurance Company

  A policyholder should make comparisons of the insurance plans online in order to determine the most appropriate insurance plan for them. Remember to choose a trustworthy insurance company and the one that offers a claim settlement ratio of at least 90%.

• Choose the Sum Assured

  You can decide your sum assured amount by following the below mentioned rule of thumb:
  The younger you are, the higher should be the sum assured for your policy. In case, you are in the age bar of 25 to 30, then your insurance cover needs to be around 15 times of your yearly income. While, in case your age is between 45-55 years, an insurance cover of 10 times of your yearly income would be sufficient. There are various factors that need to be considered at the time of deciding how to select term insurance with the correct sum assured.

1. Your regular expenses depending on your lifestyle
2. Your age
3. Your financial responsibilities
4. Insurance plans that you are already having
5. Existing loans

• Select the Plan Duration

There are multiple factors associated with choosing the right term insurance plan with right policy term.

1. Present Income
2. Expected Retirement Age
3. Your current age. Generally, the younger an individual is, the longer would be their policy term and lesser premium amount they will have to pay.
4. The expected increase in income within the next few years.
5. Financial responsibilities in present as well as in future.
6. Major expenses to fulfil future goals like wedding, education, travel, healthcare costs, children, etc.

• Choose the Premium Payment Mode

  This is a significant factor in choosing the right term insurance plan. There are various insurance plans that provide the option of regular premium as well as single lump sum premium. A policyholder should select a regular premium option in case they have sufficient amount of additional cash that they can spare.

• Choose Riders

  When deciding about factors to select a right term insurance plan, a policyholder must also thing about the riders to extend their coverage. For instance, in case you get frequently exposed to occupational hazards, then you must consider buying an accidental disability rider or an accidental death benefit rider. Also, policyholders who wish to offer extra safety to their children should consider availing a child support benefit rider.

• Disclose Details Regarding Existing Policy

  In case you are having an existing insurance plan, you need to disclose the insurance provider, policy number and other necessary details to your insurance provider. If you fail to do so then it might affect your claim procedure.

At the End

There are various factors that should be considered when deciding a term insurance plan. As a policyholder you must do careful comparison and select an insurance plan that best fits within your budget and meets all your requirements.

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Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.