Term life insurance is one of the popular insurance plans and availing it is the first step towards financial security. The term life insurance plan provides security to your family members when you are not around. As term insurance plan is availed to provide protection to your loved ones, you should be very careful while availing it. In this blog, we will discuss various things you should consider while buying a term insurance plan.
While buying a term life insurance plan, you should calculate the required amount of coverage (sum assured). Your sum assured should be at least 15-20 times your actual income.
You should be very careful while calculating the insurance coverage amount, because a single mistake can cause you to underinsure yourself. Consider the following points while deciding on the cover amount.
You may think you are still young, why should you avail term life insurance? But, this is not a good idea because buying term life insurance might become difficult after you enter your 30s, as expenses increase.
The delay in availing term life insurance will increase the overall premium amount. As you grow old, the coverage will also decrease. If you want to get all the benefits available in a term life insurance plan, you should avail the plan as early as possible.
There are many insurance companies offering different types of insurance policies. So it is very important to choose the right insurance company, which matches your needs. While selecting your insurer, you should do some research.
Claim settlement ratio is an important factor to be checked, when selecting the insurer. Claim settlement ratio gives the total number of death claims settled by the insurer. For instance: If the insurance company receives 1000 death claims and settles 970 claims, the claim settlement ratio is 97%. You should select the company which has a good claim settlement ratio.
One thing you must always keep in mind is you should never avail a term life insurance plan, just by looking at the premium. Many people fall for the insurance plans with low premiums that are designed for a shorter time span. This type of insurance is of no use.
Riders are an extra benefit offered by insurance companies, if you pay a slightly higher premium. Your insurance cost will increase if you opt for the riders which you don't need. You should pick the riders which you really need. Most popular riders are critical illness rider and accidental death benefit rider.