Before you dive into the process of purchasing term plans, it’s essential to understand key factors to select the best term insurance plan for you. So, if you are on the boat, read the following blog til the end to learn about the same in detail.

What Should You Look For in a Term Insurance Plan?

COMMERCIAL BREAK
SCROLL TO CONTINUE READING

Given below are some of the significant points you need to look for while purchasing a term insurance plan:

●Reliable Insurance Company

You must ensure you invest your hard-earned money in a reputed and reliable insurance company. So remember to check their backgrounds, including the claim settlement ratio, particularly before purchasing a plan.

●Affordable Premiums

The term insurance plan that you purchase should perfectly align with your budget to avoid a premium burden. Usually, term insurance is the most affordable life insurance product; however, you must ensure you can afford the premium throughout your tenure.

●Multiple Payout Option

Make sure to check that the term plan comes with multiple payout options, such as monthly, quarterly, and annually, in the form of a lump sum, regular source of income, or an increasing income at the beginning of the payout.

●Critical Illness Coverage

One of the most effective riders, critical illness coverage is essential in enhancing the coverage of your existing plan. Through this rider, you can receive a lump sum payment in case you are diagnosed with a critical illness that is covered in your existing plan.

●Accidental Death and Disability Coverage

Check for plans that include additional benefits like accidental death and disability cover. Considering the uncertainties of life, these can also help you manage your finances better during impending emergencies.

●Availing Tax Benefits

Do not miss out on going through the tax benefits under Sections 80C and 10(10D) of the Income Tax Act of India. Premiums paid on term insurance plans are eligible for tax deductions, and the maturity benefits and bonuses are generally tax-free.

What are the Things to Consider While Selecting a Term Insurance Plan?

There are a few things to consider when opting for a term insurance plan to ensure you select the best plan for your family:

●Number of Dependents

Take into account the number of people financially dependent on you, including their financial requirements in the future, such as higher studies, marriage, etc.

●Age

Age is crucial when purchasing a term insurance plan since the premiums you pay or the maximum sum you can apply for largely depends on your age. So research the plans and premium amounts you can opt for based on your age.

●Financial Liabilities

Remember to consider any financial liabilities that may get passed on to your dependents after your demise. These include home loans, personal loans, car loans, and even credit card bills. The coverage should be enough to clear all such liabilities.

●Long-term Goals

You should consider any long-term financial goals you may have, such as sponsoring your children's marriage or buying a house.

●Income

Your current annual income, along with a potential increase in your earnings in the future, should also be considered. Thus, it is always advisable to go for term plan coverage that is 10 to 15 times your current annual income.

●Health Status

Pre-existing health conditions also tend to impact premium amounts. So make sure you are aware of your current and potential health conditions and possess the necessary documents for them.

●Retirement Plans

You should also consider the time left for your retirement or if you have plans to take early retirement since you will not have a regular source of income after that. You need to opt for coverage that ensures a financially secure post-retirement life.

●Usual Expenses

You also need to consider the usual monthly expenses that your family needs to spend on things like house rent, groceries, education, healthcare, etc.

●Inflation

Consider inflation as a crucial factor when purchasing a term plan, as it can lower your purchasing power over time.

Final Words

To put it in a nutshell, having a term insurance plan is an essential part of better financial management of your life. Once you choose the right term insurance plan, you can aim for a peaceful and financially secure future for your dependents, even in your absence. So make sure to thoroughly understand your financial requirements, assess the reliability of your insurance provider and opt for a suitable term insurance plan today.

 

 

(This article is part of IndiaDotCom Pvt Ltd’s Consumer Connect Initiative, a paid publication programme. IDPL claims no editorial involvement and assumes no responsibility, liability or claims for any errors or omissions in the content of the article.)