Points to Consider When Purchasing a Term Insurance Plan

Purchasing a term life insurance plan becomes even more crucial when you are the only earning member in your family. It offers coverage for the loss of income that your family members may have to suffer in your absence or in case you fall critically ill.

There are a number of term insurance plans available in the market today, we need to choose the plan that  fits us based on our requirements as well as budget. Given below are a few points that you must keep in mind when purchasing a term insurance plan:

• Consider the Lifestyle and Needs of Your Family

  One should start by calculating the lifestyle expenses and present needs of their family, after doing that, analyze how costly it is going to become in future, and that would be your overall coverage amount required. Also, take into consideration inflation and future needs, in order to plan in advance for your increasing financial responsibilities.

Must Read: Term Life Insurance Or Mutual Funds? Which Is A Better Option?

• Calculate Plan Tenure

  After deciding the amount of coverage that you would need, it is significant to know for what duration you would need it for. Generally, it is said that a term insurance plan must offer coverage to the policyholder till the age one wishes to work i.e till their retirement.

• Check the Claim Settlement Ratio of Insurers

  It is important to check the claim settlement ratio of an insurance company before deciding to purchase a term insurance plan from them. Before shortlisting an insurance company, ensure to check their claim settlement ratio, which is the overall number of claims paid against the total number of claims received by the insurance provider. A higher claim settlement ratio denotes that the company is trustworthy and the chances of receiving the complete sum assured amount is also high.

• Smartly Opt for Riders

  Other than the death benefit, certain insurance providers offer additional coverage by providing riders like waiver of premium add-on, disability add-on, loss of employment add-on. These are some of the riders that can be included in the term plan by paying an additional premium amount. If chosen wisely, these riders can provide you with great benefits in the future. However, adding too many riders can prove to be costly, thus, choose wisely.

At The End

A term life insurance plan is a long term contract between the policyholder and the insurance company. This insurance plan would offer financial coverage to your family members in your absence. Therefore, ensure that you select the right term insurance plan by taking into consideration the important factors afore-mentioned.

Also Read: How Are Term Life Insurance Premiums Calculated?

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.