Things to consider while choosing Term Life Insurance

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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Term life insurance - How it works

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