Term insurance is a type of life insurance plan. It’s the way to secure the future of your family, especially when you’re the only bread earner in your family.
The insurance company provides the financial assistance to the family members or nominees of the policyholder in the case of untimely death of the insured.
Some insurance companies also provide the benefit at the time of maturity of the policy. You can typically cancel the term insurance plan anytime if it becomes tough for you to pay the premium.
A lot of term insurance plans available in the global market are according to the varied needs of the customers. A term insurance plan is a major investment so you should invest wisely and smartly. Do a lot of research before investing in any term insurance plan. A lot of online tools are available, which help in making the comparison between the various term insurance plans and selecting the best one for you. There are a lot of things you must keep in mind when buying term insurance plans; here are six of those things…
1. Claim Settlement Ratio
Claim settlement ratio is calculated by dividing the total number of death claims approved by the insurer with the total number of death claims received by the insurer.
Claim settlement ratio actually helps you understand the reliability of various insurance companies. Before purchasing any term insurance plan, you must consider the reliability of that insurance company. The higher the claim settlement ratio of an insurance company, the higher the chances of settlement of that term insurance plan are from that insurance company.
2. Availability of Riders
It’s wise to gather sufficient information before purchasing term insurance plans.
Riders are the additional benefits attached to the term insurance plans. Some of the most common riders are:
- Accidental Death Benefit Rider
- Accidental Total and Permanent Disability Rider
- Critical Illness Rider
- Waiver of Premium Accelerated Death Benefit Rider
- Hospital Cash Rider
Some term insurance plans have in-built riders, while other term insurance plans have add-on riders for which you have to pay an additional amount. If an insured dies because of the accident under the basic term plan, which is without any accidental death benefit rider, then only the death benefit will be provided to the nominees of the policyholder.
On the other hand, if the insured has taken the policy with accidental death benefit rider, then death benefit and rider benefit are given to the family or nominees of the insured. You should check before purchasing the term insurance policy whether the policy has built-in riders. You can also invest on add-on riders if required.
3. Make the Comparison
Many term plans are available in the market. Before selecting the best plan, you need to do a lot of research.
You need to compare the benefits and features of various term insurance plans. Before purchasing any term insurance plan, you must check various aspects including sum assured, mode of premium payment, claim settlement ratio, policy cancellation terms, maturity period, the total premium to be paid, reputation and reliability of the insurance company.
You should select the best one as per your affordability and requirements. There are a lot of tools available online which helps in comparing the various term insurance plans. Term insurance premium calculator is a tool that helps in calculating the amount of premium to be paid for a chosen sum assured. With the help of a term insurance premium calculator (there are many available if you Google it), you can easily compare features and rates of different term insurance plans.
4. Choose the Right Time
It’s important to take the term insurance plans at the right time.
One should take term insurance at an early age. The greatest benefit of getting yourself insured at an early age is that you have the greater coverage and at an affordable premium rate.
When you buy the term insurance policy at a later age, you get less coverage at higher premium rates. So you should get yourself insured as early as possible and at the right time.
5. Select the Right Tenure
People generally prefer short-term insurance plans as they are available at lower premium rates.
Buying term insurance for a shorter period might save some money, but it wouldn’t always help you in the long run. After some time you will have to invest in some other insurance plan and that too at a higher premium rate.
Never buy short-term insurance plans purely for lower premium rates. In fact, you should buy the term insurance plans for the long tenure when you are young.
6. Reputation of the Insurance Company
This is an important indicator that helps you understand whether you should buy the term insurance plans from a particular insurance company or not.
You need to check the stability and growth of the insurance company before referring to the term insurance plans of that company. A lot of information is available online which helps in knowing the reputation, reliability, bankruptcy status and goodwill of the insurance company.
Smart people believe in making long-term plans. They make all possible efforts to make their family’s future secure. This is where term insurance plans can take care of the family when the insured is not around. Simply put, the insurance company provides the financial support to the family of the insured.
Term insurance plans are a great investment. So you should do a lot of research before purchasing any term insurance plan. Today, when everything is available online, the process of comparing various term insurance plans has become simple and easy. A lot of tools are available online which help in comparing different insurance polices for your convenience. Use them!