Points to Consider Before Buying a Term Insurance Policy in India

Points to Consider Before Buying a Term Insurance Policy in India

We are the happiest when we are with our family, aren’t we? Maybe that is one of the reasons why we look forward to the weekends so that we can talk about things, cook and eat together, go to places, etc. with our family. All is good until we are with our family. Have you ever thought what if something happens to you and all this happiness just vanishes in a fraction of seconds? Well, we must accept the fact that life is uncertain and anyone of us may come across some kind of accident that may take our life. And as we have a family, it is one of our prime responsibilities to take care of their finances, especially when we are not around. The best thing you can do for your family to avoid financial crunches after your death is getting a term insurance plan.

Many people feel as though they are diving into the unknown when exploring the worlds of term insurance. There are many reasons for this, including a lack or seriousness of life risk, poor awareness of the available term insurance products on the market, and misinformation about term insurance.

People often overlook the fact that term insurance can be an important component of any individual’s or their family’s financial planning. Financial planning is about managing your finances to cover unexpected and unplanned events, saving, investing for wealth creation, as well as planning for major milestones and large expenditures.

Who should purchase term insurance?

A term plan is not right for everyone.

Who should buy?

  • One earning member of a family
  • Person who has dependents and family
  • Person with debts such as a home loan or personal loan.
  • Individuals who wish to receive tax benefits from term insurance premiums.

Who shouldn’t buy?

  • One person without dependents
  • Retired person who does not have any income to pay the premium
  • Person who is financially dependent but cannot pay premiums

Whom to purchase term insurance

  • Life Insurance Companies
  • Insurance Brokers/Agents
  • Insurance Aggregators

The Pros and Cons Of Term Insurance Policies – How to Make an informed Decision

What is a term plan?

A term plan is a term life insurance plan that provides a cover amount to the beneficiaries if the insured passes away within the term insurance policy tenure. The period for a term insurance plan can be 10, 20, 0r 30 years. You can choose any one from the choices of the period. The premium is usually affordable and can be paid monthly, quarterly, or annually. However, if the insured survives through the period of the term insurance plan, then the nominee will not get any return.

Several companies in India offer term insurance plans, and all their policies can differ from one another. Therefore, before you buy term insurance, you need to consider a few points. Here are some term insurance tips for your help:

  • Policy duration: You must check the tenure the policy is offering. Ideally, it should cover the entire period you work. Taking a policy of short tenure will certainly end in s shorter period but will not give as much cover as one may want. Taking a long-term policy is certainly a good idea, and the best is the plan that enables you the flexibility to fix the tenure.
  • Cover: As you buy a term insurance plan, you need to choose an adequate coverage amount. This will help the dependents to get a good return when you are not there anymore to support them financially.
  • Inflation: When you are purchasing a term plan, think about the expenses that your family will have to bear after 10 or 20 years. After such long years, the expenses will not remain the same. Therefore, you must consider the factor of inflation and choose a plan that gives you higher returns.
  • Features of the plan: Checking the features of the plan is one of the most significant things that you should not miss out on. The features may include the tenure, flexibility to fix the tenure, the sum assured the premium amount, and whether to pay the premium monthly, quarterly, or yearly. You need to check if the features match your requirements.
  • Claim settlement ratio: You need to check the claim settlement ratio as well as all the terms and conditions. This will help the nominees to have a clear idea of the coverage that they are going to claim.
  • Compare plans: There are no two ways for this. You must compare almost all the term plans that are available in the market. This will help you to have an idea of what all plans are offering and whether you are choosing the right one or not.
  • Premium affordability: The premium you are going to pay should not be a burden on you. And you must check this with the insurer before finalizing a term insurance plan.

This term insurance guide should help you making the right decision and getting your term insurance plan from the right insurer. For a better understanding of term insurance plans, you can visit IIFL Insurance and check out all term plans offered by various insurance companies.