Things to consider while choosing Term Life Insurance:
Term insurance is pure and cheapest form of life insurance.
The life insured is covered for a defined period of time. If life insured
expires during the term of the policy, the death benefit is payable to the
nominee. If the plan completes the stipulated policy term and the person
insured is alive, the plan matures and on maturity, no benefit is paid as the
insured is alive.
However there is an option available called term return of
premium. In this option death benefit is paid to nominee in case life insured
expires during policy term. If policy holder is alive then deposited premium
will be paid at the end of policy term.
Let's have a look at the factors you should consider while
buying term insurance plans:
1. Premium against life cover: - The wise
decision taken while buying term plan is that one should opt for the maximum
sum assured at the lowest premium possible. No other insurance policies offer
such a high level of coverage at such low rates of premium. However premium
varies individually depending on his age, health and family health history etc.
It provides complete financial security to the family in
case of uncertainty. Term plan is not a tool of investment. No benefit is paid
on maturity. So opt maximum sum assured keeping your debts and life goals in
mind.
Premium for same sum assured can be different in
comparison with different companies. You should choose the premium amount which
allows to your pocket till policy term.
Premium can be paid either monthly, quarterly, half yearly or annually.
Here companies provides offer to pay premium either Single
pay, Limited pay or regular pay. Policy
holder has to choose option at the time of taking policy.
- Single Payment Option - Single premium payment forces
you to pay the whole amount at one go and enjoy the
benefits till policy terms.
- Limited Payment Option - A limited premium
payment option where you pay the premium for a shorter span of time and enjoy
the benefits of an insurance cover for a longer time.
- Regular Payment Option – Regular premium
payment is the most recommended mode and it involves paying premium monthly,
quarterly, half-yearly or yearly. The regular premium mode is advised firstly
because of the affordability reason.
2. Policy Period: - Premium once fixed, it remains
constant throughout policy term. The term in this policy varies from a minimum
of 5 years goes upto maximum 35 years.
If we consider according to age, maximum companies covers
peoples from minimum age of 18 years to maximum age of 75 to 80 years.
3. Additional Benefits: - Here we are taking
about riders that offer additional benefits along with base policy. This
feature enhances base policy coverage.
Common Riders in Term Insurance are:
- ·
Accidental Death Benefit Rider
- ·
Accidental Total & Permanent Disability Rider
- ·
Critical Illness Rider
- ·
Waiver of Premium
- ·
Hospital Cash Benefit Rider
4. Claim Settlement Ratio: - Many
insurance companies offering different types of plans in the market, it is very
important to choose the insurance partner. The claim settlement ratio of
an insurance company is the number of policies that are settled or the number
of claims that are paid. It is advisable to select an insurance company that
has a high claim settlement ratio. Insurance regulator IRDAI publishes CSR data in its reports.
5. Insurance Company's Reliability:- We all wish to choose reliable and stable partner who always develop trust among their customers. Basis
the company’s reputation and the financial goodwill, you will get a clear
picture of its business, number of customer complaints and grievance redressal
numbers.
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