How To Buy The Right Term Insurance Plan?

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When it comes to a life insurance product, the Term Insurance Plans attract your attention, simply by the magnitude of the offers and the price that is quoted. A blueprint for your financial planning will be incomplete in the absence of a term plan in your kitty if you are the sole breadwinner of your family and have dependents to support. There cannot be any safety net better than a term plan for your family when you intend them to continue with same lifestyle independent of your presence. A term plan also covers for major liabilities like a home loan in your absence. In order to sift through the plethora of offers, the choice of the best term insurance plans takes a lot of effort on your part. Max term insurance plan may act as a reference point to arrive at an informed decision. 

What is life insurance?

It is a contract between you and the insurance company to cover you for life risk with a promise to pay an assured sum to your nominee if you pass away during the policy term against premium collected from you. In case you survive the policy term, you are guaranteed payment of the sum assured plus the accrued bonuses. 

What are the basic life insurance plans?

Of the multiple schemes on offer by the 24 companies who operate in the life insurance industry in India, there are only three basic categories of life insurance plans. The rest are variants of these basic plans or a combination of them. 

Term Plan:

The purest and the simplest life insurance product that pays your nominee death benefit on your demise during the currency of the policy. The simplicity of the plan allows the companies to promise hefty sum assured at very competitive premium rates.

Endowment Plan:

It allows you to save in addition to the life insurance provided. It thus helps in building a corpus in the long term.

ULIP:

It is a plan that benefits you with features of investment along with the life cover. It is eminently suitable to grow your money in the long run through market determined returns. It is locked in for five years. 

What are the factors that influence the coverage for the best term insurance plan?

There are certain cardinal points that help you to come to an informed decision while purchasing the best term insurance plan.

  • Your life stage and the number of dependentsare crucial to your coverage.
  • The projected amount that will be needed by your family to maintain the lifestyle provided by you in your absence.
  • It is important to assess your family’s needs rather than your income to arrive at the amount of cover. 
  • The quantum of your liabilities is another factor that is required to be added to your basic cover.
  • Check the claim settlement ratio of the company youshortlist. Higher the ratio, better is your chance of full payout.
  • Choose the right riders to enhance your cover. Riders for critical illness, disability, employment loss, premium waiver etc. add value to your cover against nominal additional payment.

Which Company to choose for the best term insurance policy?

The best way to choose the company is to base your analysis of the claim settlement ratio on two parameters. One is the percentage of claim settled in numbers against the number of claims submitted. Two the percentage of the settled amount in the juxtaposition of the amount of the total claim submitted. The ideal is both should be high and appearing in the green list of the Annual Report Card published by IRDAI on the two parameters. 

Exclusions in the best term insurance:

Most term insurance like the Max term Insurance plan, extend coverage for all types of death, which includes natural, accidental or due to illness. Yet there are exceptions like death due to natural disaster, an act of god or by the act of terrorist. It is therefore prudent to go through the fine print.  

Survival benefits in the best term insurance plans:

The plan terminates on completion of the term of the policy and there is no provision for any survival benefit in most term insurance plans. The Max term insurance plan also there is the only provision for death benefit like any other term insurance plan. However, there are some plans that offer renewal or conversion to other plans with the continuity clause after payment of difference of premium with the same sum assured. 

How to buy the best term insurance plans?

The biggest advantage with the best term insurance plans is their simplicity. Due to this single factor, online purchase of the Max term insurance pan makes sense for more reasons than one, the primary being economic followed by lower documentation. The major factors are enumerated below:

Any time operation:

The digital era has ushered in the 24/7 concept making it accessible all times of the day. 

Low premium:

The online node can make your premium cheaper by up to 40% at times. The guiding principles for lower  premiums are:

  • The absence of brokers and agents eliminates payout of commissions.
  • Lower overheads are passed on to you. 
  • It is assumed that online buyers have a better profile, for the insurance companies to offer a lower premium. 

Facility to compare:

The portals of aggregators allow you to compare and then choose. However, the robust portal of a company say Max Term Insurance may not allow you to compare, but the lower premium principle stands. 

Swift and Safe:

The online mode of purchase is swift and secure as the operations are routed through reliable gateways. 

Bottom Line:

The several advantages and the benefit of a large cover for a low premium makes the best term insurance plans a must buy for you. No other insurance product is as paying as the term insurance plan, only the right choice is what you need to make among the wide array of offers in the market.

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