Today’s generation believes in the concept of YOLO (you live only once), and so the majority of youths avoid investing in life insurance plans. Life insurance is not just beneficial for you, but it also protects your family from a financial crisis. The most common and inexpensive way to do this is buying a term insurance plan. Term insurance plans provide coverage for a specific period. Various factors need to be considered while purchasing term insurance like age, income, liabilities, etc. If you are planning to buy a term insurance plan, here are a few points you need to consider while choosing the plan.
Determine the need – Insurance plans are purely need-based products and shouldn’t be bought due to peer pressure. Hence, it is necessary to determine the requirement before buying the term insurance plan. Also, once you determine the need for buying insurance, the next question is how much insurance cover you need.
Decide the tenure – The tenure of term insurance is equally important as covering amount. The tenure should cover the policy holder till he/she reaches the retirement age. The tenure of the term insurance is decided by the applicant based on his age and the age at which he/she plans to retire.
Decide where to buy – Buying term insurance online is much different than buying offline. If you go for online option, you can get freedom of comparing various plans of different insurance companies. You can use online calculators on these websites to calculate premium.
Consider inflation risk – While deciding the cover amount ask yourself whether the amount decided by you will be enough by the end of the tenure? You need to take inflation in consideration while deciding the cover amount and pay out option. Choose an increasing cover plan or an enhanced cover to fight inflation.
Compare costs and benefits – As we discussed earlier there are various term insurance plans available in market and to choose the right one you need to compare. Compare the pros and cons of each plan based on your factors such as age, income and liabilities. You can compare the premium amount offered by different insurance companies.
Claim settlement ratio – One of the major factors to consider while choosing term insurance plans is claim settlement ratio. The claim settlement ratio of the company tells you about the number of policies settled by that insurance company. The consumer too must be transparent in sharing details like medical conditions, income, average spending, etc. with the insurance company while applying to avoid your application getting rejected.
There is no doubt that term insurance is one of the most inexpensive option to provide cover and ensure financial security to your family. All you need to do is research and compare well before selecting the plan.