Tips to Buy The Best Term Insurance Plan

• Eastern Eye Staff
• 14 April, 2018

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By: Eastern Eye Staff

A term insurance plan is referred to as a pure life insurance product that is comprehensive and cost-efficient. Upon the demise of the insured, the term plan promises to pay death benefits to the beneficiary of the insurance in lump sum or installment during a specific time period.

The benefits of the term insurance plan significantly depend on the kind of policy you have invested in. Below we are sharing some important tips that will help you choose the best term plan to protect your loved ones from the uncertainties of the future:

• Calculate How Much Coverage You Require

The term life insurance coverage should cover how much money your family would require in case you meet an untimely death. In order to calculate the insurance sum, consider the following aspects:

• Estimate the monthly expenses of the member’s dependent only on you and multiply it by 150 for future inflation.
• Add the total liabilities you have to include personal loans, home loans, credit card bills, etc.
• Add expenses that you planned in terms of life goals like education or marriage of your children
• Add the retirement corpus that you would like to leave your partner’s retirement.
• Deduct your liquid assets in the form of mutual funds, stock, fixed deposits, etc.

• Choose the Plan Tenure

Once you have decided how much coverage you need, then it is time to understand the duration of your insurance plan. The time should not be less as the policy may expire before all the financial obligations are met. Similarly, the tenure should not be very long as the amount of premium would be high. You can determine the tenure of the plan by the time when your liquid assets subtracting your liability will be more than your term insurance policy.

• Being Wise About Add-Ons

Best term insurance allows you to add riders at cost-effective rates. Generally, there are four types of rides that include –

• Coverage for critical illness:In this lumpsum amount is paid to the insured when he or she is diagnosed with critical illness mentioned in the insurer’s policy.
• Coverage for death due to the accident:In case the insurer meets with unexpected death due to an accident, an additional amount will be paid to him or her along with the basic coverage sum.
• Premium Waiver on Disability:If the insured individual becomes permanently disabled while the tenure is active, the future policy premiums will be waived off.
• A premium waiver on critical illness:In this, if the insured person is diagnosed with a critical illness during the term of the policy, then all upcoming premiums would be waived off.

Do your research to find the benefits of these add-ons for you before making the final decision.

• Understand the Claim Settlement Ratio

The claim settlement ratio generally attracts a lot of attention. It signifies the efficiency at which the insurance companies settle their claims. While an important consideration, this ratio is just an indication of their efficiency. It should be considered as an important filler instead of the key criterion for decision making.

Above are some of the key considerations that will help you choose the best term insurance plan.