4 Things To Look Before Buying Term Insurance Policy

0
9
Buying Term Insurance Policy

Insurance plans have been proven to be beneficial on so many grounds. Whether it is to start saving or bring financial coverage policy, these plans have always helped in many ways. Term insurance plans are meant to provide coverage for a certain period, where premiums can be paid in flexible annual tenure. It started as a basic, and as more and more providers started introducing different products, things became quite difficult to understand. 

Indeed, many providers are piling up dozens of plans and their different combinations, which lead to confusing customers. Hence, it is highly essential to set things straight before you invest in any term policy. 

In this article, you will get to know about the important variables that are to be considered while choosing term insurance. So, let’s get started:

Table of Contents

#1 Calculate The Insurance Coverage Amount of Policy

No doubt, this term insurance plan is one of the best savings plans. But only until you know a ballpark figure of how much money you and your family would need in a certain period. Simply grab a paper and calculate the following estimates:

  • Monthly expenses of your family x 150 (150 factors future inflation).
  • Add your liabilities, including loans, credit card bills, fees, etc. 
  • Deduct the liquid assets in hand like mutual funds, stocks, FDs (if any)
  • Add all the future expenses that you are likely to save for major life goals in the next 15 years—for instance, children’s higher education, health, marriage, or retirement. 
  • Add the retirement corpus that you are likely to leave for your spouse or children. 

Based on these calculations, you will be able to determine an estimated amount for the coverage. 

#2 Set The Tenure of The Plan Policy

The most important thing in buying a term insurance plan is to set its tenure. Never set it too little as the policy might lapse before you can meet your requirements. Also, it should not be too long that the premium starts to increase. You must set it according to a specific life goal, like higher education, marriage, or retirement. 

#3 Wisely Choose You Add-ons 

Today, insurance providers are keen to provide you with add-ons meant to increase the plan’s value. You must choose the add-ons smartly that will be most beneficial for you. Some of the popular add-ons are additional death cover in case of accidents, coverage for critical illnesses, waiver of premium in case of disability, etc. Ask your insurance provider and ascertain all the add-ons and wisely choose one. 

#4 Claim Settlement Ratio

It is a major attention seeker for customers as it states the insurance company’s efficiency in settling the claim. If a company has an 80% claim settlement ratio, that means 80 out of 100 policies taken from the company have been successfully settled. It would help if you went for a higher claim settlement ratio. 95% and above are considered ideal for selection. 

These are the four major pointers that you must always know before you invest in a policy. Make sure you look at all the options available in the market and then settle for one that suits your requirements in the best way. 

READ  How to Choose the Best Luxury Limousine for Your Wedding

LEAVE A REPLY

Please enter your comment!
Please enter your name here