Do Not Buy A Term Plan Without Considering These Factors

Nowadays, your financial portfolio is incomplete without a life insurance policy, especially if you have dependents. Taking care of the financial security of your loved ones by getting your life covered is one of the first things that you should do.

To start with, a basic term life insurance plan is a must-have in your portfolio. It offers you life cover for a high sum assured in return for a premium. This sum assured is paid as a death benefit to your nominee(s) in case you meet an untimely demise during the policy term. Term Insurance is one of the most affordable life insurance options, making it a popular choice among policy buyers!

But there is a wide variety of term insurance products in the market today and choosing a term insurance plan is a huge decision that you should always make carefully.

6 Crucial Factors to Consider When Choosing a Term Insurance Plan

A term insurance plan that is purchased after careful deliberation can provide a robust financial safety net to your family. On the contrary, inadequate life coverage can render your term plan ineffective. The main considerations you should make while purchasing a term insurance plan are listed below.

● Choose Adequate Cover

You do not want your loved ones to be left with a financial burden in case you are no longer around. Therefore, it is crucial to choose a suitable level of coverage, which must always be done with caution.

Always consider your age, income, career, medical history, the number of dependents you have, and your average monthly expenses. Then decide on a term plan that can account for all these variables.

Selecting a term insurance plan with less coverage just because its premiums are lower will leave your loved ones without the sufficient financial stimulus needed to sustain their lives in your absence. So be careful never to purchase insufficient coverage just because the premium rates are low.

● Select The Appropriate Policy Period

The next crucial step is deciding on the term of the policy. The ideal policy tenure should last you at least till you retire, or in other words, till you have an income on which your loved ones depend.

It is always recommended to choose a term insurance plan at a young age to enjoy enhanced insurance coverage at very affordable premiums. In addition, if you purchase a policy early, acquisition it gives you the longest possible insurance period, which helps you and your family create a more secure financial bubble that lasts for as long as they are dependent on your income.

● Never Withhold Any Information At The Time Of Buying

You should never withhold crucial information from your policy provider if you want to ensure a smooth claim settlement process later. It is vital that your family members do not encounter any difficulties when filing a claim in case you are not around. By informing the insurance company about any risk factors, such as a history of drinking or smoking, as well as any potential critical illnesses, you may guarantee that your loved ones' term insurance claims won't ever be turned down.

● Always check the Claim Settlement Ratio of the Insurance Provider

Also, don't forget to check the insurance company's claim settlement ratio (CSR). It is one of the most crucial metrics when buying a term insurance policy. The claim settlement ratio demonstrates the number of claims settled by the insurance provider against the total number of claims filed. Therefore, the chance of an insurance claim being settled will be higher if the claim settlement ratio is high. As a result, you should always consider getting insurance from a reputable insurer with a high CSR. If you keep this in mind, you can be sure that, in the event of an emergency, the claim made by your nominee(s) will be settled.

● Add Suitable Riders, If Needed

Having a base-term insurance policy might not be sufficient in all scenarios. In some unforeseen scenarios, your ability to earn a living may be affected if you are disabled due to an accident or get diagnosed with a critical illness. This is where life insurance riders may be helpful.

Riders are optional add-on benefits that might or might not be a part of the main policy. When added, they kick in when a covered event occurs and offer additional financial protection over and above the base sum assured. A few examples of riders you can include with a term insurance plan are premium waiver, critical illness rider, accidental death benefit, disability income, and accelerated death benefits.

Such add-ons benefit customers who want to keep their risk coverage in one policy or with one insurer. However, you should consider the need for each rider carefully before opting for them.

● Select The Appropriate Insurance Company

One more crucial factor you should consider before buying a term insurance plan is selecting the right insurance provider. It is essential to look at factors including the insurance provider's experience, client testimonials, claim settlement ratio, solvency ratio, and financial stability. For example, if you choose to go with a trusted company like Edelweiss Tokio Life Insurance, you can choose from a host of attractive plans that are comprehensive and customizable.

What Advantages Does Term Insurance Offer?

Now that we have glossed over how you can choose an ideal term plan for yourself, let us briefly discuss some of the benefits that this perfect insurance policy can provide for you:

Affordable Premiums

One of the biggest advantages that a term insurance plan has to offer is its low premiums, especially if you take the policy early. Even if you buy it later, term insurance premiums are the lowest compared to other life insurance policies. This makes them a must-buy product for the financial security of your family.    

High Sum Assured

Term plans are popular since they provide you with a high sum assured for low premiums. It is not uncommon for someone to have life cover that is at least 15 or 20 times their annual income. Such a high sum assured can be of great help for your family in their time of need.

Tax Benefits

Section 80 (80C) of the Income Tax Act of 1961 permits tax deductions for premiums paid towards term insurance (and other life insurance) policies. The most you may deduct under this section in a fiscal year is Rs. 1,50,000. Additionally, Section 10(10D) of the Income Tax Act exempts your beneficiaries from paying any taxes on the death benefits they receive.

CONCLUSION

As we can see, one of the most responsible investment choices in your financial portfolio is a term insurance policy. This not only provides your family with financial support when it's most required, but it also helps to secure their future in case you meet an unexpected demise. Therefore, picking the appropriate term insurance plan is crucial to avoid future financial burdens.

Let's say you're seeking a complete term insurance policy that offers sufficient protection and flexible premium payments to protect the future of your loved ones. In that case, Zindagi Plus by Edelweiss Tokio Life Insurance is a good plan to consider. It gives lucrative options like the ability to add your spouse to the plan or discounts on premiums if the sum assured chosen by you is very high. You can find out more details about it on their website. So, start looking for the right term plan today!

(Disclaimer: Above mentioned article is a Consumer Connect Initiative. This article is a paid publication and does not have journalistic/editorial involvement of IDPL, and IDPL claims no responsibility whatsoever.)