Before we delve into the how and why of term insurance let us commiserate the basics of the best term insurance plan. In the era of uncertainty, various lethal diseases like the novel COVID-19 and economic fluctuations, insurance policies have become a protective weapon for many. Term Insurance is one segment under the umbrella of insurance policies. There has been continuous swelling of policies in the current times. It is very requisite to choose the best term plan for your benefit.
What is Term Insurance?
Term Insurance is a variation of life insurance policy which provides financial coverage to the insured for a certain period or ‘term’. If the policyholder is demised while the policy is in force death benefit would be paid by the company to the beneficiary. The best term insurance demands a premium level which is a monthly specific cost charged by the company from the policyholder to consequently dispense the benefits.
Points to Consider Before Purchasing a Policy
The primary purpose of any term insurance is to act as a cushion i.e., provide financial security to the family members in case of untimely death. As an essential breadwinner of the family, it is necessary to make an informed purchase decision.
1.) Recognize the Riders that provide Maximum Benefit
Riders add more value to a basic plan. and Apart from the death benefit, certain plans offer supplementary coverage in the form of riders. Waiver of premium waives off the payment of future payment in case of accidents specified by the insurer. They are of considerate value while choosing the best term plan.
2.) Claim Settlement Ratio
Claim settlement ratio is the numerical value that informs you about the amount of claims settled during paying back against the ones filed. It is advisable to choose a higher claim settlement ratio of about 98-99 claims out of 100 since there are greater chances of claiming the whole sum. Thus, it is imperative to make sure that the plan has effective claim settlement during the reimbursement time.
3.) Inflation Accountability
It is inevitable to consider inflation. Inflation causes the price of articles to rise and consequently the drop in the value of the rupee. For instance, you may take a cover of 50 lakh today. However, after 10 years with inflation of a few per cent the monetary reimbursement of this value would be much lesser. To eliminate the problem, choose a plan that covers the number of hikes by 5-10%per year. Accordingly, the recurring increase in sum assured would help take care of inflation.
4.) Online vs Offline
Buying a plan offline or online makes a difference. While buying the policy online one may compare various products on prices and features on various portals. There are no intermediaries involved so the decision made is unbiased. Online policies are more economical and leading companies give 5% discount on the premium in online purchase Online, the free-look period is 30 days whereas offline it is only 15 days.
5.) Other Factors
Consider or add any liabilities you may have to the cover amount. Determine how much your family would need for their daily lifestyle. Compare the cost and benefits of the plan. Bring to notice the pros and cons of the plan.
You cannot deny the importance of a term plan and it is important to analyse different types of plan before choosing. Thus, these are the factors to take in consideration while choosing a policy.