One of the most basic forms of financial protection for your loved ones is a term insurance plan. A simple term insurance policy entitles your family to a lump sum death benefit pay out in case something was to happen to you during the policy period. If you’re an earning individual and have people depending on you or their finances, then a term insurance policy is a must for you.
Before you purchase a term insurance policy, you must consider a few factors that could help you get the best possible outcome from your term plan.
Life Cover Amount
When you purchase a term plan, you must choose how much life cover you would need. This is the amount that would be paid to your family in case you pass away during the policy period. Your family would be relying on this amount for their future goals and expenses. So, you must calculate their financial requirement in the future and figure out the total life cover you need. You can do this by using an online insurance calculator that takes into account your age, lifestyle, income expenses, liabilities etc and advises a life cover amount.
Policy Tenure
Unlike whole life insurance, term plans are valid for a limited number of years. So you must decide the policy term for your plan. Depending on your age, it could be anything from 10 to 30 years. If you’re getting a term plan at an early age, then it is advisable to go for the maximum available policy term, as this would attract lower premiums.
Online or Offline Purchase
Nowadays you can purchase a term plan from the comfort of your home. All documentation will be done digitally when you purchase a policy online. You may wish to buy your term policy offline by visiting the insurer or via an agent. Do note, however, that premiums for online bought policies are lower since the insurer’s expenses are reduced.
Insurance Company
If you scan the market for an insurance policy, you’ll be awed by the sheer number of companies offering these plans. It may be confusing or hard to choose one insurance company out of so many. Our advice is to choose a well-known and reputed insurance firm for your term plan. Make sure they have a good claim settlement ratio, favourable reviews, are financially robust, and most importantly, have a good customer relations wing.
Should You Get A Term Plan?
Before you buy a term plan, reconsider by asking yourself whether you really need a term insurance policy. If you’re a breadwinner for your family and have dependents, then yes, you must buy a term plan. If you’re earning but do not have any dependents, then you do not need a term plan. Similarly, if you’re retired and have no dependents, again, you do not need a term plan.
You must also note that if you’re buying a term policy, make sure that the tenure is not going beyond your retirement age, as after that your dependents may eventually become financially independent.
