Getting a life insurance plan may be one of the most important financial decisions of your life. Having a life cover is, ideally, a long-term commitment. Knowing that it is the right plan for you may help you rest easy about the financial circumstances of your family in the event of your untimely demise.
Term insurance plans in India are one of the most easily available life insurance options. They offer a substantial life cover value at relatively lower premiums. These plans are available online as well as offline. They can earn you tax benefits as well.
With these worthwhile features, many consumers tend to rush into buying a term plan. In doing so, they end up with a plan that may not fulfil their expectations, leaving them wanting more. To ensure that you are getting the best term plan for yourself, it is essential to consider the following factors:
- Purchase timing
When thinking of term insurance plans in India, there is a prevalent misconception that they are only suitable for employed male members or men with dependents. However, term plans can serve anyone who can expect to leave behind survivors or financial liabilities. From the perspective of costs, it is best to buy these plans when you are younger. If you haven’t, plan the purchase in a way that is suitable for your life goals. Also, consider increasing your sum assured or extending the duration, as and when your responsibilities increase.
- Sum assured
The sum assured is one of the most important considerations in a term plan. It is the amount your nominee can expect to receive as the death benefit. If you want to make the best use of your term plan, this amount cannot be chosen at random. It needs to be carefully calculated, considering your means and your family’s needs. The amount should be able to fulfil your family’s needs after you’re gone and take care of any liabilities you leave behind. Another way to ensure the security of your loved ones is choosing an amount at least 10x as high as your annual income.
- Number of plans
The best term plan is the one that eliminates the need for you to have another term life cover. It partially depends on the plan offered by the insurance provider. It also depends on how you tailor the details, such as sum assured, duration, and premium frequency. Thus, when choosing a plan, ensure that it serves your future needs. You can have more than one plan if you feel the need. But before you do, consider making alterations to the existing ones, so you do not have more than one premium to pay.
- Tenure
The ideal tenure for the best term insurance plan depends on your financial situation and your expectations. The longer the plan tenure, the longer you will have premiums to pay. However, it is a safe bet to have a life cover at least until the age of retirement. If you are buying a plan closer to retirement, you may want to keep it till the age of 75-80 years, if your policy allows it.
- Insurer
You may choose the ideal insurance provider for yourself based on two factors. The first would be the availability of a plan that fits your expectations. The second factor is the claim settlement ratio. This ratio represents the number of insurance claims successfully settled by the company. The higher the number, the better the chances of your claims being settled.
- Nominee
Nomination is another significant aspect of your term plan. You can name one or more nominees. Moreover, you can change the nominee at any point, given the policy is in force and premiums are up to date. Ensure that throughout your policy duration, you have formally named a nominee. If they are a minor, you will be required to name a guardian. Nomination ensures that the death benefit reaches the intended recipient.
These are the significant factors you should consider before buying a term plan. Taking the time to get these details right will help you choose the best term insurance for your needs.
