The cost of living these days is rising at an alarming rate. This is the reason it is crucial to have financial security in place that will assure your family that the life will go on for them, even if you are not around anymore. A popular instrument to make that happen is term insurance, a life insurance product that provides high coverage at low cost for a specific period.
Term insurance is the most straightforward financial product in the market that can help you protect your family amid life’s uncertainties. But with so many plans available today, it can be confusing for the first time buyer to pick the best term insurance plan without the right guidance.
How to Purchase the Right Term Insurance Plan?
Before you decide to buy term insurance, you need to understand about different plans and thoroughly analyze their benefits. After that, you must investigate different aspects of ofthe available term plans before zeroing in on an ideal policy for yourself. Knowing what to look for will protect you from unpleasant surprises.
By adding the best term insurance to your financial portfolio, you can give your loved ones the protective financial cover in case something happens to you. But before you make the policy purchase decision, here are some essential things you need to keep in mind:
- Choose the Right Sum Assured
Sum assured is the amount your dependents will receive in case of your passing during the policy period. To know how much coverage you will need, you must consider your age, your financial responsibilities, basic expenses, lifestyle habits, the family’s future requirements, debts, and liabilities, including the inflation.
Ideally, the younger you are, the cheaper your insurance will be. If you are paying any debt, then the payout should include all the pending payments and still leave enough for your family to live comfortably. It is generally advisable to choose the sum assured at least 15 to 20 times your current income.
- Take Your Life Stage Into Account
As you age, you will achieve different life stages, such as getting your first job, getting married, having kids, their higher education, marriage, and then your retirement. Planning for these life stages and financial objectives will help when you decide to buy term insurance.
For example, you may want to have a comfortable retirement or send your child abroad in the next tenyears. The best term insurance is the one that matches your life’s existing as well as future goals.
- Choose the Longest Term
The longer you stay invested in your term insurance, the more money your family will get in the end by the power of compounding. Therefore, when you are looking at the best term insurance, choose your policy term as per the number of years you are planning to work.
The more extended policy tenure you have, the better chances you will have of ensuring your family’s wellbeing. This is the reason financial experts recommend that you buy term insurance as early as possible so that you can enjoy more extended policy cover at lower premiums.
- Claim Settlement Ratio of Insurance Company
The claim settlement ratio is the number of claims settled by the insurance provider as opposed to the number of claims raised during a given year. Every year, the Insurance Regulatory and Development Authority of India reveals the claim settlement ratio of insurers that helps you decide which policy to buy and from where.
As a general rule, it is always better to look for an insurer whose claim settlement ratio is more than 90%. Higher the insurance company’s claim settlement ratio, the better is their credibility of settling the policy claim.
- Availability of Insurance Riders
There are add on riders that you can attach to the best term insurance to enhance the cover and make it more customized to suit your lifestyle needs. Riders are add-on benefits, such as critical illness, that provide additional financial help in case of emergencies.
Similarly, there are other riders such as waiver of premium, accidental death benefit, accelerated death benefit, or disability income that allow you to increase your financial security and reduce the risk of inadequate insurance coverage.
- Compare Insurance Plans
Given the availability of several insurance providers in the market, it is essentialto compare the plans online to find the best term insurance most suited to your lifestyle and requirements. Apart from comparing the policies based on prices, you must also check the features, benefits, and claim history before committing yourself to the policy. Online term plans also cost cheaper, and it iseasier to buy from the insurance provider’s website.
After making up your mind about purchasing the best term insurance, you may start by taking a look into various term insurance plans online. Online term insurance plans from reputable insurers such as Max Life Insurance enable you to make an informed buying decision by reviewing, comparing and selecting policies that provide maximal benefits at cost-effective premium amounts. These plans also allow you to make the purchase quick and hassle-free.