Choosing life insurance is one of the most important financial decisions in your life. It is a decision that directly affects you and your loved ones. Hence, you must choose the right term insurance for yourself. Term insurance is a pure life policy that offers a life cover for a fixed period. In an unfortunate scenario where the policyholder is no more during the policy tenure, the nominee will receive the policy’s sum assured. This sum assured ensures that in the policyholder’s absence, the financial needs of their dependents are taken care of. Since term insurance directly affects your and your family’s life, here is a checklist to choose the right term insurance plan:
Opt for sufficient coverage
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When you are buying life insurance, choosing the right life cover is a crucial decision that you need to take.
What is term insurance most popular for? Its affordable premiums.
Hence, with a term plan, you can easily get sufficient coverage by paying lower premiums compared to other types of life insurance policies. Ensure that when you are selecting the coverage, you consider the needs of your loved ones. Estimate the funds they require for their current lifestyle along with any future goals that they may have, like education or marriage. Also, it is essential that if you have any liabilities; you have considered them as well while choosing a term plan.
Read the fine print
Before purchasing life insurance or any other long-term financial instrument, you must read the fine print. Read the policy papers before signing them and ensure that you are fully aware of the terms and conditions of the insurance provider before you buy a policy. Doing so avoids any problems or misunderstandings in the future.
The earlier you buy, the better
When you use tools like aterm insurance plan calculator, you realise that age is one of the major factors that are considered when calculating your premium. The earlier you buy term insurance,is more likely your premium will be lower. Buying a term plan at a young age allows you to lock the policy at an affordable premium which you can easily pay throughout the duration. It also allows you to get an immense sum assured at a low premium.
Tenure matters
What is term insurance? Life insurance for a fixed period in a nutshell.
The ‘period’ for which you buy your plan is important. The tenure ideally should be the number of years you are likely to have dependents and liabilities. Avoid choosing a smaller tenure simply because it has affordable premiumsbecause after a few years you might have to buy a new life cover. The more you age, the more expensive it will be to get a life cover. Instead, evaluate your finances, your responsibilities, and your goals, and then choose a tenure accordingly. You can check the premiums you need to pay for your tenure with a term insurance plan calculator.
Check the reputation and the ratio
When you are buying term insurance, you must select a reputed insurance provider. Choose an insurance provider who has an excellent reputation along with a good claim settlement ratio. This ratio reflects the number of claims an insurance company has settled to the total claims that they received.
Hide nothing intentionally
Several policyholders withhold facts about themselves, fearing that revealing them would cause them to pay more premiums. They hide the truth about their health, their habits like smoking or drinking, and even their family history. Even though withholding this information may give the policyholder a low premium amount to pay, it may defeat the entire purpose of their life insurance. If the insurance company finds out the hidden information while filing the claim, they might reject the claim altogether.
Compare before choosing
When you browse for term insurance plans, you will come across several insurance providers claiming to be the best in the business. It is important that you thoroughly research the plans that you find suitable and compare them in depth before purchasing one. When you compare and evaluate different options, you will find it easier to narrow your choice and buy the one that fits your needs.
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