Being the simplest insurance product in the market, term insurance easily gains the trust of the consumers when it comes to securing the future of their family. But as a consumer, you need to understand that buying term insurance is not just paying the premium and expecting your family to be safe for the future.
You need to understand the product well and most importantly investigate a few aspects before you purchase a policy. This will only keep you safe from unpleasant surprises.
Here are some important things that you must know before buying a term plan:
Features of the plan
Check the features of the plans you like to match your requirement. The policy should be flexible enough to allow you to choose the tenure, the sum assured, and how you want to pay the premium - annually or half-yearly. Also, see if they can provide any additional benefits related to the death benefit in the policy.
As there are many providers for a term insurance policy in the market, it is important you compare the plans that appeal to you the most and decide which suits you the best. Apart from comparing the price also look into the features, benefits of the plan, and claim history.
Claim settlement ratio
The claim settlement ratio of an insurance company is the number of policies that are settled or the number of claims that are paid back. It is advisable to select an insurance company that has a high claim settlement ratio.
The inflation factor
If you've bought a term plan of ₹ 50 lakhs and think your family's future is well secured, think again. In a matter of 10 years, this amount will be as good as 20 odd lakhs considering the rate at which inflation is increasing. So factor in inflation when you work out the sum assured you need.
As term insurance is a long term product, you must be comfortable with the premium amount charged. To determine how much you can commit to the plan on an annual basis. Don't make commitments that could be difficult to fulfill later on as they will only prove to be a financial burden obstructing the many other responsibilities you need to complete.
You must choose an adequate cover amount and avoid being over or underinsured. A life insurance policy is meant to provide for your dependents when you are not around. Ideally, this plan must take care of the basic expenditure that your family will incur; major expenses like education/marriage of children and other liabilities like loans. If you avail of a life insurance plan with an inadequate sum assured, then the entire purpose of securing your family is defeated.
Term insurance is one of the most sensible investments in your financial portfolio. This would not only provide financial aid to your family but also act as a help to fund their future goals.
So, by keeping the above-mentioned parameters in your mind, you can give your loved ones the life and security they deserve even when you are not around.