If your family is dependent on you financially, imagine what would happen if God forbid something happens to you? Life is unpredictable for everyone. You don’t know what would happen the next moment, so it’s better to prepare yourself – if not mentally, but financially for the sake of your loved ones.
A term life insurance policy ensures that your family doesn’t have to go through the financial strain should something happen to you. Life goes on, and they should have the financial means to move forward. All the reasons why you must never think twice before getting a term life insurance policy.
However, you must think a great deal about the factors that you must consider before purchasing a term life insurance policy.
That said, here are some that can help you decide the best term plan in India for your family needs.
-
The Term Cover
The last thing you would want is to leave behind you is an inadequate amount that doesn’t meet your family’s requirements for a longer period of time. Hence, don’t just go for any coverage, but think through. Make sure the amount you choose covers:
- The long-term general expenses
- Necessary expenditure such as education fees (if you have kids who have not completed their expenditure, marriage, and medical expenses.
- Inflation Rate
- Lifestyle Expenses
- Debt Payment
- These expenses x years
-
The Policy Period
A term life insurance policy only provides you with the death benefit within the policy period. Hence, if something happens to you after you survive the term policy period, you wouldn’t be entitled to the coverage. Hence, decide the policy period after careful consideration.
Anyone can get term life insurance who is in the age bracket of 18-65 years. Ideally, the younger you are, the longer should be your policy period. The policy period is generally determined by your age.
For instance, if you are in your 30s, you should get a term covering 30 years or more. If you are in your 40s, the ideal term cover should be 15-20 years.
That said, there are other factors as well that determine the policy period. These factors can be your financial goals, your health and fitness, retirement age, and current and future income.
-
The Type of Term Life Insurance Policy
There are 4 types of term life insurance plans. These include:
- Standard Term Insurance Policy
- Group Term Insurance Policy
- Increasing and Decreasing Term Insurance Policy
- Term Return of Premium (TROP)
The key difference between all these term life insurance policies is that of premiums. However, Term Return of Premium Plan (TROP) bears characteristics that are different from all other term life insurance policies. TROP like any other term life insurance policy provides the death benefit. However, in case the policyholder survives the term period of TROP, they’ll be subject to returns; these returns would be the sum total of the premiums paid by the policyholder.
The catch, however, is that TROP premiums are slightly on the higher end as compared to other term life insurance policies.
So, in order to decide the best term plan in India for your family’s needs, you have to decide if you want a return (your cashback of premium payments) or a much more affordable term life insurance policy that sits within your means.
Image Source: Shutterstock
-
A Genuine and Reliable Insurer
Just as you go with a well-known and reliable brand to ensure top-notch product quality, you have to go with a genuine and reliable insurer to make sure that you are making a secure investment. To spare your family the hassle of running a million trips to the insurer or tussling with an insurer that in the end denies your claim owing to this or that reason, you have to choose an insurer after a thorough research and a term insurance comparison. Hence, look for the following when you are selecting an insurer:
Claim Settlement Ratio: A claim settlement ratio indicates the ability of an insurer to settle the claims made by families of the insured. A company with a high claim settlement ratio should be your pick.
Reviews: Thankfully, with the existence of internet, you can check out the reviews of insurance companies before you make a pick. Go for the one with least consumer complaints and higher customer satisfaction.
Reputation and Goodwill of the Company:
Going for an obscure company that offers the cheapest premiums and the highest coverage shouldn’t be the only driving factor for you. You should always pick companies that have earned a name for themselves in the market. Not only they are professional in their conduct but are genuine.
Solvency Ratio and other Financial Details:
You wouldn’t want to invest your money in an insurance company with a poor solvency ratio. You must know that the company you are investing in is financially capable of fulfilling the sum assured to you. A company with a high solvency ratio indicates that it is financially capable, and your investment is safe with it.
