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Guide To Help You Identify The Right Term Insurance Plan

Term Insurance Plan

When we start earing, it is important that apart from us we also take good care of our family ad loved ones. Though we try to make the perfect financial plan, all the planning is incomplete with term insurance plan. There are various kinds of insurance that one can opt for like Medical, property, motor, life and many more. All the various and different plans provide different coverage amount and so vary in their features. You must choose the right one by using the below guide.

Apart from all these insurances, there is also life insurance, which acts as savings for a rainy day. It provides you with a life cover for a definite period and in case of any unfortunate events, your nominees will receive the pre-defined death benefit. In short, it offers financial security to your loved ones against the loss of income due to your death.

Why term insurance is important?

There are various benefits that term insurance offers to customers. Some of them are:

  1. High-value cover at affordable premiums
  2. Complete Life cover
  3. Payout of the sum insured.
  4. Coverage of critical illness
  5. Accidental Death Benefit
  6. Terminal illness coverage
  7. Tax Benefits under Section 80C

Term insurance not only offers life coverage but ensures that you do not leave your family under any financial stress after you die.

Choosing the right Term Insurance

There are various insurance agencies available both online as well as offline, offering several term plans for individuals to choose from. Different plans provide different coverage amount and so vary in their features You must choose the right one by using the below guide.

1. Check for premium vs coverage:

Based on your age, your medical history and some other factors, the premium of your life insurance is determined. So, in such cases, you must study the premium that you are paying and the coverage that you are receiving.  

2. The term insurance overage required:

Make sure to check how much money your family needs to meet their unavoidable expenses. The best to calculate this is:

  1. a) Estimate the monthly income of your family and multiple the same with 150 to account for inflation.
  2. b) Add your liabilities like loan, credit card bills etc.
  3. c) Remove all the liquid assets you have like FD, stock etc. 
  4. d) Make sure to also add the retirement expenses of your spouse.

3. The tenure of the loan:

Once the expense is known, know the tenure for which you need the loan. It shouldn’t be too small otherwise the insurance may lapse before the financial obligation, and if the tenure is large the premium may increase. The time at which these two numbers coincide should be the tenure or age till which you should take the coverage. 

4. Choose the ad ons wisely:

Apart from the general terms of insurance, there is also some special add on that you can choose for your family. These provide much better coverage. Some of these include:

  1. a) Additional cover for death due to accident
  2. b) Cover for critical illness.
  3. c) Waiver of premium on disability
  4. d) Waiver of premium on critical illness

5. Look at claim settlement ratio:

Claim settlement ratio is an important factor when choosing the term insurance. It is an indication of the efficiency at which the policies are settled by the insurance company. A settlement ratio over 95 per cent is considered good, thus consider it as a filter. 

6. Buy insurance online than offline:

In this digital age, all the insurances and policies are available online for purchase. Instead of visiting multiple lenders, it is always advisable to check for the best insurance plans online, use the term plan compare tool and then apply through their app or website.

With online term insurance, you can also get the insurance at a lower price with some added benefits that might be missing on offline purchase. 

Conclusion

A term plan is an important insurance, and one must apply for it, not for themselves but their family. It secures your family from any emergency when you will not be around to take care of them. It is important that you first define your reasons for taking the term insurance plan and then accordingly choose the one that offers maximum benefits with ease. Term life insurance is a long-term contract between you and the insurer, and it will benefit your family when you are not there.

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