Term insurance is a useful life insurance policy. It offers high coverage at a pocket-friendly premium. It is a worthy investment that will provide financial assistance to your family during your absence. There are various term insurance plans in India, and if you are planning to buy one, here are a few points to remember.
1. Purchase at an early age
Anyone in the age group of 18-65 years can buy term insurance. You must invest in a term plan when you are young, as the premium will increase with age. If you have a steady income and are clear about the coverage you want, go ahead and buy the policy right away. Use a term insurance premium calculator to determine the premium for a particular sum assured.
2. Buy the term insurance policy until a certain age
The purpose of term insurance is to secure your family’s financial goals in case anything unfortunate happens to you. So, you must invest in a plan with a tenure until retirement. After you retire, your responsibilities towards the family will reduce, as your children will be independent by then.
3. Do not fall prey to the daily/monthly premium trap
You may have come across schemes, like ‘Get INR 1 crore term plan for INR 18 per day’. However, you need to understand the underlying terms and conditions, which may not be favorable. Thus, it would be wise to stick to the standard annual term insurance premium option.
4. Search for the best quote
You can use the term insurance calculator to compare the quotes offered by various insurance companies. Ensure that you get costs from at least five-six insurers and review the features to get the most suitable plan.
5. Purchase riders only if needed
Riders (add-ons) are beneficial, but not everyone may require them. Riders will increase the premium. So select the rider that suits you. For instance, there is no need to buy an income benefit rider if you want your family to receive the sum assured at one go and not in a staggered manner.
6. Choose the coverage practically
While deciding on the term cover, you will need to consider the list of expenses, liabilities, and the inflation aspect. For instance, have a home loan of INR 40 lakh, a car loan of INR 5 lakh, and other liabilities worth INR 5 lakh. Your gross yearly income is INR 12 lakh. In this scenario, your policy must cover your total liabilities, which is INR 50 lakh, and three years’ annual package, which comes to INR 36 lakh. This sums up your aggregate debts to INR 86 lakh. So, in this case, a term plan of INR 1 crore is ideal for you.
7. Be clear about your health-related issues and lifestyle habits
To avoid any complications at the time of settlement, you must insist on having a medical test. Disclose all your health-related issues before buying the term plan. For instance, if you have diabetes or hypertension, be honest about it. Also, do not hide your lifestyle-related habits, like drinking and smoking. If you drink and smoke excessively, you will end up paying a higher term insurance premium. However, if you are dishonest and the insurer finds out later, your nominees will have problems during claim settlement.
8. Consolidate all your term insurance needs into a couple of policies
You need not buy multiple policies to cover your needs. By doing this, you are only increasing the paperwork, which practically does not provide any benefit. If you are planning to take a cover of INR 1 crore, you can purchase two policies of INR 50 lakh each.
9. Read the fine print of the policy
You must thoroughly scan the policy’s fine print, as it may have specific clauses regarding the premium or claim settlement that you should know. Your policy is just like a contract. So, before signing it, ensure that you read and understand all the details properly.
10. Maintain your documents and nomination details in order
Store your term insurance policy documents in a physical and digital format. Also, let your family members know where you have kept them. Besides this, update your nomination details in case of any change to avert any problem during claim settlement.
Secure your family’s financial future by investing in a term insurance plan today.