How to Choose the Best Term Insurance Plan?

Life is full of uncertainties. Thus, having a term insurance plan can act as a cushion for a family’s financial security against such uncertainties. However, with an extensive range of term insurance policies available in the market, choosing the right plan can always be a herculean task. To choose the most comprehensive plan there are certain aspects that should be kept in mind. Most insurance seekers often get confused about the policy period, amount of life cover to opt for, what plan to buy, etc. To help our customers make an informed choice, here we have elaborately discussed some tips to choose the best term insurance plan.

Choose a higher coverage

As a pure protection plan, term insurance policies are known to offer the highest insurance coverage as compared to any other life insurance product. The term insurance policy only provides coverage in the form of a death benefit to the beneficiary of the policy. Thus, as per the basic rule of thumb, it is advised to choose the insurance coverage that is 10-15 times the annual income. In a term insurance policy, an individual can purchase a life cover up to Rs.1 crore at a minimum premium rate of Rs. 411 per month. Thus, keeping the future rate of inflation in mind, an individual should choose a term plan with a higher sum assured amount.

Compare the plans

We all know that term insurance plans are considered one of the most affordable life insurance products. However, to save on the premium rate, people often make the mistake of buying the wrong product. Thus, it is imperative to compare term insurance plans online. By comparing the quotes of different plans, one can choose the most comprehensive plan at a lower premium rate.

Check for the claim settlement ratio of the company

The claim settlement ratio is one of the most important factors that should be considered while purchasing the best term insurance policy. The claim settlement ratio of the company refers to the total number of claims settled in a year by the total number of claims filed in a year. It is advised to choose the insurance company with a higher claim settlement ratio as they are more reliable. Moreover, it also ensures that in case of a claim filed, the beneficiary will receive the benefits of the policy.

Know the riders offered under the policy

The best term insurance plan for an individual is the one that covers all the angles. One way to ensure this is through riders. Riders are add-on covers offered by the term insurance policy to increase the coverage of the policy. Riders can be purchased by paying an extra premium along with the basic coverage of the policy. Before zeroing in on a plan, make sure to check riders offered under the policy and its inclusions and exclusions. There are five different types of riders offered by the term insurance policy. These are:

  • Accidental Death Benefit
  • Critical Illness Rider
  • Income Replacement Rider
  • Waiver of Premium Rider
  • Accidental Death and Disability Rider

Take inflation into account

The cover of say, Rs. 60 lakhs that an individual buys today might not be enough for the family to survive 10 years later. This is because inflation would cause the price of products to rise, which will result in the value of the rupee to drop. Assuming the inflation rate of 5%, the value of Rs. 60 lakh will only be Rs. 38 lakh after 10 years. To cater to this requirement, the insurers offer term insurance plans with the option of increasing life cover, wherein the cover amount increases 5-10% every year. The periodic increase in life insurance coverage will help an individual deal with the growing inflation.

Buy policy online

As compared to the offline method, there are many benefits of purchasing the policy online. The online process of policy purchase is not only simple and hassle-free but it also saves a lot of time and money. Moreover, to choose the best term insurance plan, the insurance buyer can directly visit the insurer’s website and check the plan brochure in detail. Moreover, as there are no agents involved in the online process, one can also save on the agent’s fees. Many insurance companies also offer premium discounts for online buyers. While purchasing the policy online one can also check the credibility of the insurance company and make an informed decision.

The Bottom Point!

Term insurance policy offers sufficient coverage at a lower premium rate. It is, however, necessary for an individual to first analyze the requirement considering factors like the cover, age, money, future needs of the family, etc. and then choose the best term insurance plan as per their requirement and suitability.

FAQs
What is the claim settlement ratio of an insurance company?
The claim settlement ratio of an insurance company refers to the total number of claims settled in a year by the total number of claims filed in a year.
What are the rider benefits offered by a term insurance policy?
The riders offered by the term insurance policy are:-
  • Accidental Death Benefit
  • Critical Illness Rider
  • Income Replacement Rider
  • Waiver of Premium Rider
  • Accidental Death and Disability Rider
What are the factors that affect the premium rate of the term insurance plan?
There are various factors that affect the premium rate of the term insurance policy. Some of these important factors are age, income, gender, smoking habits, health history, occupation, etc.
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