It is essential to invest in life insurance for your family’s financial security in your absence. While traditional policies like Unit-Linked Insurance Plans (ULIPs) and endowment plans are expensive, term plans are quite affordable.
Because term plans are pure life policies, the premium is more economical compared to other conventional plans.Here, the insurer pays your nominees the benefits if an unfortunate event occurs during the policy duration. Most term plans do not have any maturity benefits, which makes it possible to procure a higher coverage at a lower premium.
Several insurance companies offer different types of term insurance. Therefore, you need to compare various policies and understand their benefits and features. Also, it is important to check the insurers’ claim settlement ratio to ensure your nominees do not face rejection if they need to file a claim in the future.
The plus points of term plans in India include:
- Flexible payout choices
You can choose a lump-sum payout option. Alternatively, you can opt for a partial lump-sum payout, and your nominees can receive the balance amount in installments at regular intervals.
- Many premium payment options
Insurers allow you to choose between limited and regular premium payment alternatives. If you pick the former, you pay the premium for a limited period with continued coverage during the entire policy duration. Moreover, you may pay the premium monthly, quarterly, semi-annually, or annually as per your financial situation.
- Additional coverage through riders
You can enhance the base term insurance coverage through additional riders. Some commonly available riders include critical illness, accidental disability, and waiver of premium.
When you buy a term plan, you need to consider certain factors to ensure your family’s monetary stability when you are not there. These include:
- Avail of sufficient sum assured (SA)
One of the first things you should consider is the SA, which is the amount your nominees receive in case of an unfortunate event. Often, the SA is chosen randomly and may not be adequate to take care of all your family’s financial requirements. So, consider your expenses along with inflationary increase, liabilities, future financial goals, and liquid assets and investments to finalize an ideal SA. You can use an online calculator to do this computation.
- Do not withhold crucial information
To ensure that the insurer does not deny your family’s claim in their time of need, it is necessary that you provide all critical information while purchasing the policy. For example, if you consume alcohol or smoke, it is recommended to share these details with the insurer, as they affect the premium. Additionally, if you suffer from a pre-existing disease, disclose it to the insurance provider when you are buying an offline or an online term insurance policy. If you are not genuine about all this, the insurer may reject your family’s claim later citing non-disclosure as the reason.
- Buy at an early age
When you are young and healthy, the risk to the insurance company is lesser. Therefore, you can get higher coverage at a nominal premium. As you grow older, your health may deteriorate, and you may suffer from multiple medical conditions, making it expensive and difficult to buy a term plan. Moreover, there may be a maximum term insurance age limit after which insurers may not provide you with life cover.
- Choose the required riders
Insurers offer riders that enhance insurance coverage. Before you opt for one or more of them, remember that the premium increases for every additional cover. Therefore, evaluate your and your family’s needs to include the necessary riders to your basic online term insurance.
Term plans shield your family’s monetary well-being. So,take time to understand different options and research various policies to make the right choice.