With a plethora of term insurance policy available in the market, it is imperative to understand the offerings of each policy. This will help you decide if the policy addresses your needs and if you need riders such as cancer rider, critical illness rider, etc. or not. Furthermore, each policy comes with a specific set of plans. Hence, before you make the final purchase, it is crucial that you look for certain things in a policy.
Let’s take a look at them below.
Calculation of the coverage:
Generally, a term life insurance coverage majorly depends on how much financial support does the policyholders and their family needs. Hence, before you venture out for the right policy, calculate your dependent family’s monthly expenses. Once you have that, considering future inflation and your liabilities such as loans and credit card bills, exclude your liquid assets such as FDs, stocks, and mutual funds. Add all the essential future life goals. All this will help you arrive at an estimation of how much financial support will your family require. Check which policy offers you this support and opt for the one.
Tenure of your plan:
Another crucial factor to consider while buying a term insurance plan is tenure. It is important to know to what age you will need the life insurance cover. If the tenure is too short, then the policy might lapse before your financial goals are met. And if it is too long, paying premiums might be a burden even after the plans are fulfilled.
Claim settlement ratio:
This ratio prompts the efficiency of the insurance company to settled policies. If an insurance company has a 98 per cent claim-settlement ratio, then, it means 98 out of the 100 claims reported was paid by the insurance company. Which means, the insurance company takes the onus of your returns and policy. However, financial advisors over the years have advised considering the claim settlement ratio as only a filter while buying the life insurance policy.
Choose your add-ons:
Term insurance plans offer various riders which help to have you a comprehensive financial cover. Some of these riders include additional cover for death due to accident, cover for critical illness, waiver of premium on disability, and waiver of premium on critical condition. These riders help to make the policy more lucrative for you.
Future of the insurance policy:
Every term insurance policy comes with more nuanced points. These points help you make the best of the policy. Knowing these points can come in handy for your dependents.