Term Insurance Buying Guide – Term insurance is a kind of life insurance policy that is for a certain period of time or years. There are limited plans covering varied components. Buying a term insurance plan must be done very carefully so that there no regrets later due to all the legalities involved. To make things easier for you, we bring you some of the important points that you need to check before buying term insurance. Do remember that this is only for informational purposes only so that you can take an informed decision.
Term insurance buying guide – Know how much term insurance coverage you need:
Before buying term insurance, you need to calculate how much term insurance coverage you need.
- For this, estimate your family’s monthly expenses and multiply them by 150. The multiple of 150 factors in future inflation.
- Add your liabilities on account of personal loans, home loans, credit card bills.
- Deduct all the liquid assets i.e. FDs, stocks, or mutual funds.
- Add expenses planned on the account of life goals that are likely to happen in the next 15 years. For example, your children’s higher studies, their marriage, etc.
- Add the amount you may want your spouse to have as a retirement corpus.
Term insurance buying guide – Decide the tenure or term of your plan
Decide till what age you would need term insurance for. Remember, the tenure should neither be too little nor too long. The correct way to calculate the tenure of your term insurance plan is to find out by what year your liquid net worth will be more than the amount you want to take as term insurance cover. Do include all your investments like PF, stock, MF, etc. while calculating this. The right coverage period would be your age when these two numbers coincide.
Choose the Insurance provider wisely
While choosing a term plan, it is important for you to keep in mind that its a long-term contract, and hence, the insurance provider should have a reputation and stability to be around for that period of time. Its generally very difficult to evaluate compare plans manually, buying a policy online gives you an edge here. You can easily check all the available plans, compare their features and prices, check the reputation of the service provider and then choose wisely.
Term life insurance plans offer addition to a document at a reasonable cost which should be considered by you. By getting some riders, you can get additional benefits at a minimal cost. Generally, the major riders available are death due to accident, critical illness, premium waiver on disability, and critical illness premium waiver.
Term insurance buying guide – Check-out the claim settlement ratio
Claim settlement is the efficiency at which the policies are settled by the insurance company. So, when you see the 95 percent in the claim-settlement ratio, it means 95 out of the 100 claims raised were settled by the insurance company. Hence, checking the settlement ratio is an important aspect of term insurance buying.
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Disclaimer: Insurance is a subject matter of solicitation. The information provided on this website cannot substitute for the advice of a licensed professional. The information and data provided on this website is of a general nature and strictly for informational purposes. For more details on risk factors, terms and conditions please read the sales brochure carefully before concluding a sale.