We as buyers weigh and verify a lot of parameters before buying a piece of our choice. While in some cases we look if the product is worth the money, in some we look for the durability even if the cost is a little higher and at times we ascertain if we need anything else to enjoy the luxury and comfort of the product. If we spend so much time to buy an object of our fancy or need, why even leave a chance of carelessness when it comes to intangible items and services like the term insurance plan? After all, this is an investment for a better life and health of self and the family!
To get the best deal, you must compare and then choose the plan which is best suited for your insurance needs. You can compare online on websites like Coverfox.com.
Here are the few things that one needs to take care of while buying a term insurance plan.
- The Cover Amount- The cover amount solely depends on your personal parameters and requirements like your age, the financial responsibilities- which is not same for everyone, your dependent’s future financial needs, the kind of lifestyle you lead, financial obligations like loans and mortgages and the general parameter of inflation and rising costs. Keeping in mind all these factors, determine how much of a cover amount you would need. In an ideal situation, if you are 25-35 years of age while buying a term insurance, the cover amount should be 20 times the annual income and 10 times if you are between 45-55 years of age.
- The policy Period- The early you buy a term insurance plan, the higher is the policy period. Keeping in consideration the general life expectancy of an average human is 70-80 years of age, if you are buying a term insurance at 20, 40-50 years should be the policy period. Also keep in mind your retirement plan and any financial liabilities you currently have. For instance, if your housing loan is for a period of 30 years, the term insurance should also be for a period of 30 years to save your family for additional financial burden in case of an unfortunate event.
- Select the Appropriate Insurer- Much as you scrutinise the plan, it is important to determine the right insurer for your plan. Few basic checks that you need to perform while selecting an insurer are: the claims settlement ratio, the solvency ratio, the financial background of the insurer and the reputation of the insurer in the market.
Advantages of Covers in Term Insurance
Covers or riders are additions to a basic term insurance plan and are highly helpful in case of an unfortunate situation not limited to death of the policy holder.
- A critical illness cover provides coverage to the policyholder and the dependents by meeting the medical expenses right from the time of diagnosis, during the treatment and other lifestyle changes arising from the illness. Illnesses like cancer, heart attack, stroke, paralysis, coronary artery by-pass graft surgery, kidney failure, major organ transplant, and etcetera are normally covered by almost every insurer.
- An income benefit cover provides a steady supplementary income to the dependents of the policy holder for up to 10 years along with the sum assured in case of the death of the policy holder
- The waiver of premium cover does not need the policy holder to pay the premium amount every month in case of an accidental disability, critical illness or loss of employment of the policy holder.
- With the accidental death benefit and accidental disability benefit cover, the dependents and the policyholder receive an additional sum of money apart from the assured sum, respectively.
Terms and Conditions of a Term Insurance in India
Every life insurance company has its own set of terms and conditions. However, there are few general terms and conditions that every insurance company follows.
- Lifestyle Exclusions: The smoking and drinking habits are generally taken into account by the insurance company while providing the plan. However, if the information is kept hidden during the purchase or the policyholder dies from ailments due to excessive smoking and drinking, the claims can be rejected by the insurer.
- Accidental Death Exclusions: While accidental deaths are covered in a term insurance, in certain scenarios the claim can be rejected. In case of an accident, the insurer employs its own medical team for investigation before responding to the claim.
- Other Exclusions can be on the scenarios of suicidal death, consumption of narcotics, STDs, pre-existing medical conditions which are not declared earlier and death from riots.
While it is important to read the terms and conditions of the term insurance policy while you buy the plan, it is also important to take into consideration your requirements from the policy to reap maximum benefits and declare any medical and lifestyle conditions to avoid claims rejection.