Protecting your family’s future is a must, especially if you are your family’s sole breadwinner. In such cases, a comprehensive life insurance cover is your answer to all things protection. A life insurance policy, however, can further be broken down basis different needs. For instance, a child insurance plan works best when you want to secure your child’s future. Meanwhile, an annuity plan is your best bet if you want a regular income coming in, even after your retirement. Choose a tax-saving insurance plan if you want to claim exemption and a ULIP plan if your goal is wealth creation.
Of all these policy plans, term insurance plans are relatively cheaper and, therefore, widely sought after. But don’t let a cheaper premium lure you.
Here are 5 things you can consider before you take the plunge and buy a term plan.
- Calculate how much cover you need:
Most people pick a life cover that seems adequate to them without doing a basic calculation. Instead, your term life insurance cover should broadly be based on how much your family will need if you or the primary breadwinner meets with an untimely demise. Make sure you factor in future inflation. Use a term plan premium calculator if need be. There are plenty available free of cost online. An inadequate life cover will defeat the whole purpose of having a life insurance policy.
- Correctly determine your policy tenure:
20 years? 30 years or 40 years? Just how many years should your policy tenure be? Your term life insurance policy’s tenure should not be a very short one considering you will have financial obligations at least until you retire. At the same time, it shouldn’t be too long because financial dependencies and obligations reduce as you retire. Don’t forget! A longer policy tenure would also mean a higher term insurance premium.
- Don’t let the ‘per day premium’ term lure you:
Most insurance companies these days resort to the ‘per day premium’ phrase to lure buyers. However, it is important to remember that one shoe may not fit all. The phrase may be in context to a particular policy only, which in turn may or may not suit your need. Therefore, it is extremely important to evaluate the policy before you actually buy it.
- Claim-Settlement Ratio:
A claim settlement ratio is the best indicator of an insurance company’s efficiency. For instance, if a company’s claim settlement ratio is 85%, it means that 85 out of 100 claims have been settled. However, you must consider a claim-settlement ratio as a filter than the sole-decision making criteria.
- Consider adding riders to your term insurance:
Riders are nothing but additional benefits that give you supplementary coverage at an extra premium cost. Here are a couple of riders you can consider:
- Accidental Death Benefit Rider – This rider can help pay an additional sum assured to the nominee in case of an accidental death of the insured.
- Critical Illness Riders – This rider helps pays a lump sum amount to the family if the insured is diagnosed with a critical illness like cancer or heart disease.
- Income Benefit Rider – This rider helps surviving members get an additional annual income for a period of 5 to 10 years.
- Waiver of Premium Rider – This rider can come to the rescue when the policyholder fails to pay premiums due to accidental disabilities or loss of income. In other words, future premiums are waived off, and the term insurance policy remains active. Without this rider, if the insured fails to pay a premium, the policy will stand cancelled, and the nominee would not be eligible for any benefit.
Other miscellaneous things you must consider before you buy a term plan:
- Compare plans: Do your research before you buy a term plan. Compare different plans, evaluate them, take advice and only then make a decision. The policy you buy must be worth your hard-earned money, after all.
- Don’t hide your medical conditions: If you want to avoid any claim-related hassles in the future, make sure you disclose all information to your insurance partner – your health issues, family health history or any other details.
- Add a nominee name: Make sure you add a nominee to your policy. That way, the nominee of your policy is entitled to receive its benefits in case of an unfortunate event.
- Don’t fret about buying a policy online: A lot of people steer clear of buying online term insurance plans. However, that shouldn’t be the case. Online plans are relatively cheaper given that lesser man-force is involved. Also, the process is simpler and hassle-free.
- Disclose any existing policies: When buying a policy, make sure you disclose your existing ones. It will help your insurance agent advise you better and refrain you from buying two policies of the same kind.
All in all, the right life insurance policy can really help you in times of misfortune. Therefore, ensure you consider all the above factors and pick a policy like the Edelweiss term insurance plan that best suits your family’s and your needs. You can always buy more than one policy, but make sure you don’t buy one too many either.