A Term insurance plan is the simplest, most basic protection plan that covers the risk of death. A Term insurance policy pays the beneficiary the sum assured (as a lump sum) upon the insured person’s demise. These plans are usually till 85 years of age.
An earning individual with dependents should have insurance cover to make up for the financial loss in case of his/her death. The term insurance plan provides insurance cover for the term specified in the policy. Know these important factors before. Below are the 5 most important questions everyone should ask before buying any term insurance:
- Amount of cover
Arrive at the amount of life cover you need. There are many online tools and calculators available for help. These calculators consider the age, lifestyle habits, number of dependents, current loans, average monthly expenses and rate of inflation to compute the amount. Independent financial advisers can also help you with the same.
- Policy period
The next most important step after calculating the amount of cover is knowing the policy period. When the policy is purchased at an early age, choosing the maximum available policy period is advisable. This ensures a relatively lower premium for the entire duration of the policy.
- Online mode or offline
One can buy policies through agents or the company. Alternatively, one can access the websites of insurance aggregators who provide comparable quotes for the same amount of coverage and term. The premium offered by aggregators or direct platforms is typically lower.
- Choice of company
When looking for an insurer, take into account factors like the vintage of the insurance company, customer reviews, claim settlement ratio and its financial health and strength. Also give a higher weightage to the customer-centricity of the company, concerning sales, service and payment options.
- Who should get this
The breadwinner of a family with dependents or liabilities including loans can secure his/her family’s financial future with a term plan. If you are not earning or are retired and have no dependents, you can ignore it.
One need not buy an insurance policy for a term that goes beyond the person’s retirement age, as most of the dependents would have become financially independent by then. An insurance policy bought at an earlier age in life has a relatively lower premium than one bought later.