Five things to consider before you buy a term plan

Posted by Jessy Jose on April 25th, 2018

Term plan life insurance is easily the most simple and easy form of life insurance. This insurance comes at a low premium and if the policyholder survives the term of the insurance, he or she does not get any returns. But if the policyholder passes away within the term of the insurance, their nominee gets a sizeable lump sum payment from the insurance company. The simplicity of this type of insurance is what makes this the best insurance plan for anyone.

However, choosing the right term plan for your needs can prove to be difficult; especially to someone who is a novice at finance. Term insurance plan is a must-have in your kitty and here are some guidelines that will help you choose the right one for you.

1. Consider your life stage: This is perhaps the most important thing to take into consideration when buying term plan insurance. How much cover you need largely depends on your stage of life. For example, if you’re single, the number of dependants you have may be way lesser than it would be if you were married.
2. Consider family income: The idea of term insurance plan is to ensure that your dependants are financially secure, even after you pass away. Hence, it is important that your term plan covers all their monthly expenses, so that they can maintain their lifestyle. Take into account your current family income and multiply it by ten or fifteen; this should be the ideal amount of your term plan.
3. Consider your future plans: Day to day expenses aren’t the only that you need take into considerwhen buying a term plan. Your insurance cover should be sufficient for your family to have the life they deserve. For example, if you have kids, consider their higher education, businesses or wedding expenses. If you have elderly parents you need to look after, consider their medical expenses, health care they may need, when choosing your insurance amount.
4. Consider your liabilities: Your loans and liabilities are another thing that your term plan must cover. You don’t want your family to have to worry about any debt or loans in your absence. Along with their expenses your term plan should also help them repay any loans, like home loans, automobile loans or personal loans that you may have.
5. Consider additional riders: A term plan will only pay your nominee if you are to pass away; otherwise the money you pay as premiums is not returned. Consider getting riders in addition to your term plan, like critical illness rider, accidental death or disability rider and so on.