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How To Choose the Right Term Insurance Plan?

How To Choose the Right Term Insurance Plan?
  • 11th Oct 2021 |
  • 912

A term insurance plan is an excellent tool to ensure that your family’s financial future is secured. However, deciding to get term insurance is one thing, but choosing the right one is equally important. If you buy a term plan that is not aligned with your needs, then it might not serve its intended purpose.

Let us understand how to choose the right term insurance plan.

Focus on Your Own Needs

The world today is highly competitive, and one always looks at their peers to ascertain their progress. A friend or colleague may have bought a particular term plan, but that does not mean the same plan will be a good fit for you.

You must undergo the due process of analysing and calculating your family’s future needs and your budget for the premiums. So don’t give in to peer pressure and focus on your own needs.

Buy Term Plans Online

In today’s digital world, everything can be done with the click of a few buttons. Buying term plans online is more affordable since insurers save up on overhead costs. There are also no intermediaries, and you can compare different policies and make up your mind. The risk of the COVID-19 pandemic also means that the less contact you have with different people. When you buy term plans online, the process is completely contactless and paperless.

Calculate the Exact Tenure for Your Term Plan

As much as choosing the right life cover of a term plan is important, tenure is also critical. Ideally, you would want your term plan to cover your life for as long as you’re earning. Hence, a good tenure is always the number of earning years you have left in your career. For example, if you’re 30 years old now and plan to retire at 60, then you’ll work for 30 years more, so your term plan should have a tenure of 30 years.

Factor in Inflation

Inflation will play a massive role in your family’s future expenses. If you choose a specific term plan with, say, Rs. 60 lakh assured sum today; after 20 years, the same amount will have a lower value. The sum assured may turn out to be insufficient for their future expenses due to inflation.

Prices will keep rising, so you must consider inflation when deciding on the term plan assured sum. Insurers also offer plans that increase assured sum by 5 or 10%. You could look into those to beat inflation.

Look at the Claim Settlement Ratio

An insurer’s claim settlement ratio gives you an idea of how many insurance claims were settled and how many were rejected. When buying term plans, make sure that your insurer has a good claim settlement ratio. If the insurer has a low ratio, this means their claims are not approved often, and all your hard work would go in vain if your family’s claim is not approved.

Using the above points, you can make sure that you choose the right term plan for you and your family’s needs.

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Ref. No. KLI/22-23/E-BB/492

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