Taking a term insurance plan is an important decision, and several factors need to be considered before making a choice. By assessing the coverage amount, premium, riders, claim settlement ratio and policy details, an informed decision can be taken.
Term Insurance Plan Buying: Term insurance plans provide financial security and peace of mind to the family members in case of untimely demise of the policyholder. However, before buying a term insurance plan, one needs to consider several factors to make the right decision. Come, let us know what are the important aspects one should consider before taking a term insurance plan-
Coverage amount and tenure
The coverage amount is the sum assured that is received by the nominee on the death of the insured. Assess financial obligations such as outstanding loans, education expenses and future needs of the family to determine an adequate coverage amount. Apart from this, it is necessary to consider the term of the policy, for how many days the policy is being taken. If something untoward happens during that time, how will the financial targets be met and how will the financial assistance needed by the dependents be met during that time.
Premium and Capability
For a term insurance plan, the person buying the insurance has to pay the premium amount. Premiums may vary depending on factors such as age, health and smoking habits. Ensure that premiums can be deposited smoothly throughout the policy term to avoid lapsing of coverage. It is advised to compare the premium rates offered by various insurance providers to get the best deal without compromising on the coverage benefits.
Riders and Additional Benefits
Additional riders can provide more benefits to enhance the term insurance plan coverage. Riders like critical illness, accidental death and disability rider provide additional protection. Understand the riders available and assess whether they suit your specific needs? While additional benefits such as waiver of premium and income replacement may add value, carefully evaluate their relevance and associated costs before including them in your policy.
claim settlement ratio
The claim settlement ratio of an insurance company reflects its confidence in the settlement of claims. It represents the percentage of claims settled against the total claims filed. Research the claim settlement ratios of various insurers to select a company with a higher ratio. A higher claim settlement ratio indicates higher chances of your nominee getting the claim amount easily in case of an unfortunate event.
Policy Terms and Conditions
Read and understand the terms and conditions, exclusions and limitations of the policy thoroughly. Consider factors like waiting period, pre-existing conditions, suicide cases and policy renewals. Awareness of these details will prevent any kind of hassles later while filing the claim. If any terms or conditions seem unclear, seek clarification from the insurance provider or financial advisor.
It is worth noting that taking a term insurance plan is an important decision, and several factors need to be considered before making a choice. By assessing the coverage amount, premium, riders, claim settlement ratio and policy details, an informed decision can be taken.