While Buying Term Insurance Compare Features, Not Just Premiums
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While Buying Term Insurance Compare Features, Not Just Premiums

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  • 11th Oct 2021
  • 16
While Buying Term Insurance Compare Features, Not Just Premiums

In today’s fast-paced world, people are beginning to realise the importance of term insurance. Where previously only people in their late 30s or 40s felt the need to purchase insurance, nowadays, even the younger generation see the advantages of buying term insurance as early as possible.

The increase in demand has led to a plethora of insurance products in the market, and you must choose the right policy to get the best advantage. The trend is that policy buyers are attracted more towards insurers offering lower premiums and overlooking other features.

While premiums are an essential factor when deciding, you should not solely rely on the premium when buying a policy. You also have to look at the policy features and benefits and how it is helpful for you.

When purchasing insurance, make sure you also look at the following features apart from the premium.

Pay-out option

When you buy term insurance, generally, insurance companies give you the flexibility to choose how you’d like your family to get the death benefit during claim settlement. You can request a lump sum pay-out to the nominee, or if you feel they’d be better suited to handle periodic payment, you can choose deferred payment.

In deferred payment mode, the insurer pays the death benefit in small amounts periodically. Pay-out flexibility is a valuable feature, so make sure you have this option when you purchase term insurance.

Premium Paying Flexibility

Insurers allow you to choose your premium paying schedule. You can either pay premiums at monthly intervals, quarterly, semi-annually or annually.

Yet another option is to pay the entire premium amount as a one-time lump sum payment. Get these details clear when you buy insurance so that you can choose the right premium payment mode to suit your specific needs.

Life Cover

This is probably the most significant factor when you buy term insurance. Your life cover is the amount your family will get in case you pass away. It must be sufficient to take care of their daily expenses at their current lifestyle, any significant one-time expenses in the future, pay off existing loans and other expenses like vacations, retirement etc.

If this amount is insufficient, your family may face a lot of problems in the future. When you see a policy with a low premium, the chances are that the life cover may also be less. Choose a life cover amount that is at least 15-20 times your current annual income.

Policy Tenure

It is advisable to choose a policy tenure that is as long as possible. If you select a short policy tenure, the policy will end sooner, and at that age, it may be challenging to get a new policy at affordable premiums.

Ensure that your policy tenure covers your family at least until your retirement or even after that. The longer the policy term, the longer your family get protection.

Thus, when you buy term plans, don’t let premiums be the only deciding factor. Look for the above features so that your term policy does not turn out to be short of your expectations.

- A Consumer Education Initiative series by Kotak Life

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