Due to increasing uncertainties, it becomes very crucial to have your future financially secure. As you already have a lot of responsibilities, you must also have a good backup plan to provide financial protection to your family. However, a term insurance plan is here for your rescue. Life insurance plans are a very popular and cost-effective way to start saving.
Based on your personal preferences, you could also buy the Online Term Insurance plan from a trusted company. Unlike other insurance plans, there are greater benefits of the life insurance plan. Term insurance provides death benefits to the family of the deceased, and the premium that they charge is comparatively lower than other plans.
Buying an insurance plan is quite easy, but what if it is not that effective for you? Well, you must choose a plan that can cater to your needs, and for that, there are certain factors that you need to keep in mind before buying an insurance plan, like age, health, income, liability, and policy period.
In this article, we will discuss how to choose a term insurance plan.
6 Things to Keep in Mind Before Choosing a Term Plan
1. Buying Availability
You can easily buy a term insurance plan. But there are many companies that offer different premiums on the life insurance plan. Before buying an insurance plan, you must compare the plans of different companies and choose the credible and most suitable one for you.
You could also buy term plan by either visiting the branch office or online by visiting the company’s website.
2. Income Tax benefits
Apart from providing financial security, the term plan also provides income tax benefits. According to section 80C of the income tax act, various investments and expenditures are exempted from the income tax, allowing a maximum reduction of up to Rs.1.5 lakhs for the listed instruments such as EPF, PPF, ULIP, ELSS, and other payments like repayment of home loan, life insurance premium, children’s tuition fees, etc.
3. Low Tenure
If you have taken a personal or home loan, you could also buy a shorter-term plan. However, before buying a term plan, it is very important to finalize the tenure of the term plan by considering the liquid net worth.
The total investment, stock, and provident fund would eventually be higher than your life insurance cover, which could be estimated from a term insurance calculator. The decision should be precisely taken based on self-analysis.
4. Higher Claim Settlement Ratio
The total number of claims settled against field claims is referred to as the claim settlement ratio. If you choose to invest in the term plan, the settlement claim could generate additional income and profit.
Therefore, you must decide to buy the plan from a company that has a good claim settlement process. If the claim settlement ratio is higher, then the chances of assuring the sum will be much better, but if the claim settlement ratio is lower, the chance to avail the sum assured amount would be lesser.
5. Inflation rate
The inflation rate should always be considered before choosing a term cover. If the rate of inflammation is higher, then the coverage amount for the family will fall short within a few years. But if the inflation rate is lower, then the cover amount will be sufficient for your family after a few years.
6. The cover should be decided based on family needs
Whether you are the sole breadwinner or the contributing member of the family, you must decide the cover amount based on your family needs and not on your income. Hence, the amount of the cover should be sufficient to pay the daily bills of the family.
7. Liability can be added
The individuals who are earning usually face the burden of the existing liabilities like home loan, term loan, car loan, and personal loan. The outstanding loan’s repayable amount should always be included in the life cover to prevent the EMI pressure.
8. Riders must be added
An insurance plan should allow you to add the riders. Riders refer to the additional advantages that usually come against a nominal premium. Some plans allow you to add riders, such as specific disease riders, accidental death cover, critical illness riders, cardiac cover, etc. They provide financial cover over and above the basic sum assured in the term plan.
Conclusion
If you want to have a financially secured future, you must decide to buy a term plan. This is a popular plan that offers inherent advantages. Moreover, it is your responsibility to choose a term plan based on your preferential needs.
It provides the customers the insurance options and gives them premium models, riders, and multiple payout models. You must consider the above-mentioned features before buying a term plan.
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