Term insurance plans provide coverage to the person insured for a fixed premium paid for a specified “term” of the year.
Among all life insurance plans, term insurance offers the highest coverage for premiums that are as low as a few hundred rupees, which makes it one of the most sought-after insurance products.
Some factors that demand our close attention when thinking of buying a term plan.
1. Be An Early Bird
If you buy a term plan at an early date, you will benefit as a lesser amount will go into paying premiums. Delaying it will only increase the premium amount. Most young people remain under the impression that they don't need a term plan just yet, but they often forget that life is uncertain as this pandemic has shown.
2. Be Righteous
Often people are tempted to hide their medical conditions from their insurer in the hope that they will outlive the policy period. However, assume that something goes wrong and the insurer finds that the death occurred due to a medical condition not disclosed at the time of buying the policy. In that case, the insurer can declare the policy null or void and reject the claim.
3. Coverage Amount
It is important for you to weigh your needs against the policy coverage you would want. There are various online calculators that may help you in deciding an optimum policy amount you may need based on parameters such as your age, lifestyle, dependents, monthly expenses, and liabilities, if any.
4. Policy Period
You will also need to decide the period for which you want to buy the policy. If you are purchasing the policy at a young age, it is advisable to go for the maximum available policy period. Doing so would reduce the premium during the policy tenure.
5. Choose The Right Insurer
There are several insurance companies offering term insurance plans, but you need to select the one that suits your requirements and has a high claim settlement ratio, meaning it has paid to a higher number of claimants. Also, research the company for its financial background and solvency ratio to determine its long-term liabilities.
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