Quick 30 Seconds Guide to Choosing a Term Plan

Term plan are one of the easiest to understand as the payouts and benefits are straight forward. These being the simplest form of insurance plans have become the reason for being most sold online term plans. The premium rate under this scheme is quite cheap. For example- a 20-year term plan for 30-year-old non-smoker male costs around Rs. 5521 per annum for a 1 crore risk cover which is actually cheap.

Guidelines to Compare and Choose a Term plan-

Term plan is an insurance scheme that pays the sum assured to the nominee in case of demise of policy holder during the policy term. It is a protection plan which provides financial support to the family if something happens to the person earning in the family.

Here are the guidelines to compare and choose a term plan according to your requirement-

1.      Decide your term-

Term is the time period; you wish to get covered for. Usually it is 60 minus your current age.

2.      Shortlist the plan-

There are approx. 24 insurance companies in India. Shortlist the companies that offer online term insurance plan. Online plans do not add up to agent commissions, thus these are 60 per cent cheaper.

3.      Do Research-

Do some research on the shortlisted companies. Learn about their claim settlement records, if it is more than 90 per cent, then it is good.

4.      Compare

It is important to compare premiums of various companies for different cover amounts like 1 crore etc. The cover should be usually 10 times more than your annual salary.

Things to Keep in Mind While Buying Term Insurance Plan-

If you are planning to buy term insurance plan, here are the things you need to keep in mind while buying term insurance plan-

·        It is better to buy term insurance plan early

The earlier you purchase the policy, the better it is as there is no minimum or maximum age to enter term insurance plan.

As the time passes and you age increases, the premium amount also increases. Also, if you are diagnosed with any illness or disease, it will be hard to get the policy for you. Once you know the amount of life cover you need, buy the term plan within a few months.

·      Buy policy till your retirement age only

You only need a life insurance policy till your retirement as not many of your family members will be dependent on you, thus there is not benefit of buying a policy for the longest tenure possible. When you have more responsibilities, you need to take a big cover. But as your age increases, you will move towards your retirement age, and then you will not be the provider for your family.

·      Do not buy policies with single premium

When it comes to choosing between single premium vs regular premium, do not choose single premium plan even if you can afford to pay onetime premium. The best option is to choose yearly premium for most of the people. Do not fall in the trap of single premium scheme.

·        Do not be excited with term insurance riders

Riders may act as a great add on and lure you, but these are beneficial only if you require them. Do not just go for them because it gives you a sense of more security. Here are various types of term plan riders available-

1.      Accidental Death Rider

2.      Permanent or Partial Disability

3.      Critical Illness

4.      Wavier of Premium

5.      Income Benefit Rider

Do not add any insurance rider just for the sake of it.

·       Buy the basic version

The basic version of the term plan is the one which pays a lump sum on death. There are other plans also which gives you income for 10-20 years along with the main cover, or pays a small lump sum at the time of claim along with paying the income for next 10-20 years.

·      Do not hide about your health

Do not hide about any critical health information while buying the policy. If you had any major operation or have any health issues, you should share the information with the insurance company as else your term insurance claim can be rejected. You need to disclose all the facts to the company and let the company decide.

·       Talk about your family history

You need to share if your parents or siblings have some illness with your insurance company. Do not hide is considering that it will impact your premium rate. Even if it is diabetes, you need to share it.

Conclusion-

It is important to understand your requirement first and know how much insurance cover you need. Calculate your term insurance premium amount online. If you find the premium to be within your budget, then apply for the term insurance plan.