A term insurance policy is a pure life cover that offers only death benefit if the policyholders pass away during the policy term; it does not have any maturity benefit. Comparing the plans can help you get the cover at a lower premium. Read on to know the important things to consider when comparing term plans.
Today, with the growing awareness among the people about the importance of a life insurance cover to secure the family’s financial future, many people invest in a term plan. A term insurance policy is one of the simplest financial protections that help you protect your family against financial hardship in the event of your untimely demise. The term plan compensates for the loss of income that may come upon your family in your absence.
Many insurance companies in India offer various life insurance policies to suit the varying needs of the people. Sometimes, choosing the right plan can be daunting, especially if you are a first-time insurance buyer. To ensure that you get the best coverage for you and your family, you must consider the following things while comparing and buying a term plan.
The premium is the amount you pay periodically to the insurer to keep your policy active. It is one of the most important factors to consider as it determines the policy’s overall cost. Also, the premium you pay must be affordable, and it should be in proportion to the sum assured of the policy. So, when you compare a term plan, you can use the life insurance calculator to determine how much premium you must pay annually and throughout the policy tenure and compare the same with other plans and choose the best plan accordingly.
Features of the plan
When you compare term insurance plans offered by different insurance companies, it is paramount that you look at the plan’s features and check if it suits your specific requirements. The policy should give you the flexibility to choose the tenure, mode of premium payment, and sum assured as per your convenience and needs. Also, you must check the additional benefits and select the one that is flexible and offers better benefits.
Online or offline Plan
Today, most insurance companies in India offer online services. When you compare the term plans from different insurers, you must check if they are offering the plan online or offline. Nowadays, most people prefer buying online as they are comparatively economical than offline policies. The online process also gives you the flexibility to purchase a policy with the minimal documentation process and make an informed buying decision.
Claim settlement ratio of the insurance company
Another important factor yet overlooked by many is the claim settlement ratio. It indicates the number of claims the insurer has settled successfully in a year. You can easily check the specific insurer’s claim settlement ratio on their website or the Insurance Regulatory and Development Authority of India website.
The IRDA publishes the CSR every financial year. Experts recommend choosing an insurer with higher CSR as it reflects their efficient underwriting process. Your family members have better chances of getting the funds (death benefit) without any hassles.
When you buy a term plan, you can purchase add-on covers or riders, which are additional coverage options that increase the policy benefits. For example, if you have a family history of cancer, you can consider buying a critical illness cover to get protection against death due to cancer. Similarly, you can consider purchasing accidental death coverage. Check the different add-ons offered by the insurer and choose the one that has the specific coverage you need.
The key to getting the best term insurance plan is to know your exact needs and zero-down on the policy accordingly.