When choosing a preferable term plan, the standard thumb rule is to consider coverage which is at least 8 to 10 times your current annual income. Moreover, you also have to make sure that this cover can be easily increased in case of more requirements.
Investing in a term insurance plan is one of the most plausible and wise decisions to keep your and your family’s life financially secured against unprecedented contingencies. This is a simple and cost-effective method to secure the overall well-being of your family in the long run, especially after the sudden demise of the sole breadwinner of the concerned family.
Top 7 Things to Expect From Your Term Plan
Once you have decided to purchase a term plan, you must clearly understand its probable outcome. Under any juncture, in case the insured passes away, the legal heir or the nominee is supposed to receive the sum on maturity. With the best term plan, you always associate certain expectations. Here is a list of the top 7 typical expectations that you can have from purchasing and maintaining a term plan:
One of the major reasons for term plan investment is its affordability. It is the most budget-friendly option for providing enough financial coverage to the family. In case you are a 30-year-old smoker and plan to purchase a term plan worth INR 1 crore. It will cost you no more than INR 834/month or INR 10000/year.
Enough financial support for family
After the insurer dies, the family and the nominee must enjoy enough financial protection and coverage. With a minimal premium amount, it allows the highest death benefit. It becomes all the more fool-proof with additional coverage. Depending on your apprehension and requirement, you can choose these add-ons, considering that they will raise the premium value over the basic design.
No stress after the death
A standard generic term plan pays a lump sum to the nominee on the death of the insurer. It is up to the nominee how to invest the received amount to ensure a regular income flow to sustain the family. The correct term plan can even help you in aiding the future of the family in your absence. It makes punctual claim settlements and helps you in converting a section of the total sum assured to ensure a regular income for the nominee.
No Payment Post-Retirement
In case you choose a long coverage tenure that stretches post-retirement, you can clear all the dues within that time. With the limited pay feature, you can cease premium payment and continue to enjoy the cover post-retirement.
Leaving a legacy
The whole life cover allows the continuation of term life cover till 99 years. This implies the benefit of the nominees even during natural death, providing them with a tax-free lump sum estate.
The best term plans not only cover the principal earning member of the family but the non-earning spouse too. It offers the joint option cover, making both partners the owner of the plan. This ensures the smooth running of the family despite the death of any one of the partners.
Upgrading the Cover
With time, it is natural to experience an increased income. With such an increment, it is better to enhance the term plan coverage to ensure a stronger financial footing. You can choose different riders depending on your requirements and gradually upgrade the cover.
Critical Factors To Know While Purchasing a Term Plan
While buying term insurance, you need to understand certain crucial factors:
Not Disclosing Any Critical Information
To ensure smooth claim processing, it is essential to disclose all the critical information correctly. This may include family medical history, pre-existing ailments, and any risky lifestyle choices like involvement with hazardous activities, drinking, smoking, etc.
Selecting The Primary Option
Before investing in any particular term plan, you have to undergo proper homework and research to choose the correct sum assured at an affordable premium. It is not necessary to select the very first option that comes up to you. A comparative study among different plans is essential.
This is yet another crucial factor, as this will impact your overall premium payment amount. Ensure to choose a tenure that will competently cover all your financial obligations. It largely depends on the age at which you are buying the plan.
CSR of The Company
CSR or Claim Settlement Ratio depicts the likeness of your getting your claims settled by the concerned company once you raise it. Every insurance company displays their CSR in percentage. Therefore, the higher the CSR, the better.
Most of the term plans available now can be customised to cater to your unique requirements. Moreover, you can add add-ons to ensure enhanced coverage. However, you must select these riders wisely, as it will increase your overall premium.
Offline or Online
Both these methods possess their individual sets of pros and cons. During online purchases, you have to deal with the concerned insurance provider directly, which involves minimal paperwork and might let you enjoy a better deal. In case of offline, you need the help of an insurance representative or an agent. They might offer certain special benefits that remain absent in online mode. You must consider both these options before proceeding.
Any family, with a proper term insurance plan enjoys better financial security even during the absence of the breadwinner of the family. It ensures to offer the family comfortable and secure life throughout.