Finding the Best Life Term Insurance: What To Look Out For

Posted by amrina alshaikh on November 18th, 2021


Term insurance is often looked upon with a frown, but finding the best term life insurance plan requires planning the best for your loved ones as per the circumstances and features of a life insurance plan.

Finding a term insurance plan that suits your requirements and caters to your family\'s needs requires one to carefully assess their age, income, liabilities and health to determine the best for your family needs!

If you are in need of term insurance, the following are some points that you should consider before availing one:

  • Understand your requirements

Term insurance plans exist to make the life of the applicant easier after their working years, i.e. once they retire from work. Therefore, it is pivotal to understand your individual needs rather than being influenced by your peers, family or friends.

Factors like marriage, age of children and income level must be taken into account. Fulfilling the family\'s educational and other financial requirements after the death of an earning member is why term insurances exist! Therefore, all of this determines what features, tenure and sum assured would cater best to one\'s needs. In simpler words, ascertaining assets and future liabilities should drive your search for the best life term insurance plan.

  • Buy Plans Online

Insurance providers sell their plan online via their official website or third-party sites as well as offline. But, it is advisable to purchase an online life insurance plan; due to their availability on various portals, you can compare them easily on the basis of cost and features without any intermediaries involved. Online plans are also cheaper as no middlemen fee is involved in them.

  • Ascertain the tenure

The tenure is the most important aspect of a term insurance plan that you should consider before buying a plan. A term insurance plan must cover the entirety of the applicant\'s working years. Most term insurance plans provide cover up to the age of 65, offering extra years of coverage above the retirement age. In other words, the term insurance plan should cover the years between the current age and expected retirement age.

  • Keep inflation in mind

Inflation causes a rise in the price of products, while lowering the value of the rupee over time. So, the amount of term insurance that you may deem sufficient today may not be able to sustain you in the future. With a supposed inflation value of just 5%, the value of a certain loan amount, say, Rs. 50 lakh would considerably decrease to less than Rs. 30 lakh in 10 years. So, it is best to keep the inflation numbers in mind and choose a sum assured more than what you think is necessary today. You can also check term insurance plans that offer a 5-10% hike of the sum assured every year. Such plans are devised to cover the cost of inflation over time so that the sum assured covers the individual\'s needs post-retirement.

  • Claim Settlement Ratio of the Insurer

Claim settlement ratio is the number of claims settled by an insurer in a financial year. Claim settlement refers to paying out an insured person\'s family the sum assured as per the plan chosen upon his/her death. A claim settlement ratio of 98% or more is deemed favourable for an insurance company. In lieu of this, it is also worth noting that the applicant should furnish the correct information such as income, personal habits, health conditions, etc. You can check the Claim Settlement Ratio (CSR) on the official website of the insurer and also on the online portal of the Insurance Regulatory and Development Authority of India (IRDAI).

Term insurance plans provide coverage for fulfilling the financial needs of the dependents of the insured individual in case of their untimely demise. Hence, it is prudent to analyze one\'s income, age, health conditions, and future liabilities before buying the best life term insurance plan. Assessing all these factors will help you protect your family in future adequately.

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amrina alshaikh

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amrina alshaikh
Joined: April 24th, 2018
Articles Posted: 229

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