4 Things to Consider While Buying Term Insurance Plan
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As the breadwinner of your family, ensuring the financial security of your loved ones becomes a responsibility. A term insurance policy helps fulfil this duty by promising to offer financial protection even after your demise. This helps avoid any financial burden that can be caused due to loss of the deceased life assured’s income. Thus, it is essential to purchase a plan that would meet your family’s current lifestyle and future goals. Read on to learn about 4 factors that should be considered while buying a term insurance policy.
4 Things to Consider While Buying Term Insurance Plan
Here are some factors which can help you choose the best term insurance policy for yourself.
1. Adequate Sum Assured
The pre-decided amount provided to your beneficiary after your demise is known as the sum assured. Hence, it is essential to have an adequate amount of coverage to help your family sail through any financial crisis. It can be calculated by considering your liabilities, your family’s lifestyle needs, future aspirations etc. Moreover, it is wise to keep the amount at least 15-20 times your current income.
2. Sufficient Policy Duration
A term insurance policy is valid for a specific duration which is decided at the policy inception. The minimum tenure can be of 5 years, while the maximum tenure can be around 65 years. You can estimate the duration after which you won’t have to provide financial support to your dependents. It is wise to select a plan that is neither too long nor too short.
3. Essential Riders
Insurance providers offer rider benefits on term insurance policies for some special situations. For instance, under a critical illness rider, the life assured is provided with a lump sum to pay for treatment of a critical illness. An accidental death benefit cover pays an additional sum assured for all accidental costs if the life assured dies in an unforeseen accident. It must be noted that these rider benefits raise the cost of the policy. Hence, it is advisable to purchase necessary riders only; to keep the plan under your budget.
4. Reliable Insurance Company
It would be best if you considered an insurance provider with good records and credibility to avoid any fraud or rejection of the claim requested by your beneficiary after your death. The claim settlement ratio (CSR) can help determine the reliability of the company. A higher claim settlement ratio shows that the company has been able to settle a good percentage of claims made by the policyholders.
Take Away
The act of purchasing a term insurance policy is one of the most crucial financial decisions of an individual’s life. Hence, it must be done right to avoid any nightmarish situations like claim rejections. You must fill in all personal and financial details correctly. Moreover, it is advisable not to hide any pre-existing medical condition from your insurance provider to get a plan framed according to your needs and requirements. Furthermore, even an insurance agent or a financial advisor can be consulted to make a more informed decision.
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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.
