You must remember that when you started earning, your family encouraged you to save money for rainy days. You must have discussed the importance of insurance also during financial planning. Everyone needs adequate life protection coverage that can take away worries about the future of their loved ones, especially if they are financially dependent. Every individual should consider the term insurance as one of the essential elements of their financial plan. A term insurance policy can serve you as the all-important savior when fear of uncertain life leaves you anxious. It offers financial aid to your family in the event of your premature demise and protects against life's uncertainties.
What is Term Insurance
A term insurance plan is a type of life insurance product. It provides financial coverage for a fixed tenure against the risk of premature death. Under this death coverage, the insurer pays a death benefit to the insured's family if he/she, unfortunately, passes away during this tenure.
It is the simplest form of life insurance and is popular among people because it is more affordable than any other type of life insurance policy. It provides high coverages at comparatively lower premiums. You need to pay a monthly, half-yearly, or yearly premium against the term insurance plan to ensure that your family is financially secured even if you will no longer be around.
Choose the Best Term Insurance Plan
To buy a term insurance plan, you need to decide the coverage amount, tenure, frequency, and premium payment terms. Following are the important parameters for online term insurance policy comparison to choosing the best plan:
The coverage offered under different term plans
Term insurance is a pure protection plan that can offer the highest insurance coverage than any other life insurance plan. Since it provides death benefits only, as per the thumb rule, taking a term plan covering 15-20 times your annual income is considered a smart decision. As per financial planners' suggestions, an individual below 45 years can consider buying a cover around 20 times of annual income and 15 times for 45+. Generally, a term policy offers coverage of up to Rs.1 crore at a very affordable monthly premium. You can compare term insurance policies with different insurance providers to secure your family's future.
The premium you need to pay
As mentioned, term insurance plans are the most affordable among life insurance plans. Still, online term insurance policy comparison is necessary to get it at a cheaper cost. You can find insurance companies offering discounted premiums for term plans for the same cover, provided you comply with their eligibility conditions for discount. You can select a monthly payment option to set auto-debited options.
Claim settlement ratio of the insurer
The insurer's claim settlement ratio is the percentage of claims successfully paid to the total claims received in a year. This ratio indicates the intent and capacity of the insurer to provide required financial support in times of need. The higher and more consistent the ratio, the more reliable the insurer and the easier it is to claim the insurance for your dependents.
The reputation that the insurance company carries Solvency Ratio
With the comparison of the solvency ratio, you can know whether the insurer is financially competent to settle a claim quickly. As per IRDAI (Insurance Regulatory and Development Authority of India), every life insurance company needs to maintain a consistent solvency ratio of at least 1.5.
The add-ons options offered by the insurer
If a term insurance plan can cover all the necessary angles, it is the best one for an individual. You can compare different riders or add-on covers available with a term insurance policy. It helps to increase the coverage of the policy. You need to pay an extra premium for these riders like accidental death and disability rider, waiver of premium in case of permanent disability, etc.
Thus, you should buy a term insurance policy if you have financially dependent members in your family based on this online term insurance policy comparison. Term Insurance and Life Insurance are confusing terms for most people. Term Insurance is only a kind of life insurance that provides coverage against the premium for specifically selected tenure. If the insured under the policy dies during the policy tenure, the nominee or kin will receive the death benefit. It should be noted that there will be no maturity benefit in the term plan.
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