10 Things to Know Before You Buy Term Insurance Plan
It is crucial for everyone, especially those earning, to have financial security for the future. One of the best ways to ensure financial security in future is to invest in term insurance plans. Investing in a term insurance plan not only secures you and your loved ones financially but also helps you and your family achieve their goals and dreams.
Let us first understand what exactly a term insurance plan is?
What is a Term Insurance Plan?
Term insurance plans can be defined as the type of life insurance plan which aims at providing financial security to you and your loved ones in case of your demise. The policyholder has to pay timely premiums. In return, the insurer’s family will get the lump sum assured as a death benefit, in an unfortunate case of the investor’s death.
Following are some other potential benefits apart from the life coverage
Under Section 80C of the Income Tax Act 1961, the premiums paid by the investor are eligible for tax benefits. However, tax laws are subject to change from time to time.
Affordable Premium Rates
The premiums for term insurance plans are generally available at affordable rates.
Let us now see 10 things to keep in mind before investing in a term insurance plan
The Amount of Live Cover You Will Require
Before investing in a term insurance plan, you should plan out the current and future financial expenditure of you and your family to achieve your goals and requirements. This will give you better insight when choosing the life cover while investing in a term insurance plan.
Plan That Covers Critical Illness
Go for a term insurance plan that provides the provision of covering critical illness. This will help you cover the medical expenses in case of any critical illness.
Know Your Goals
Before investing, gain clarity on what your goals are. People have different goals. For example, you could have a dream of buying a car or a house, a goal of providing good education to your child, etc.. This will give you a better insight into the ideal time to invest in a term insurance plan.
Provision of Additional Riders
Ask your insurer to provide an additional rider whenever you choose to invest in a term insurance plan. With this provision, various benefits such as accidental death, waiver of premium, etc., will get covered. Please note that riders are not compulsory and are available at additional cost.
Insurer’s Claim Settlement Ratio
A company with a higher claim settlement ratio is reliable. Choosing such a company will ensure smooth and hassle free claim settlement. Moreover, you can ensure that your loved ones don’t have to struggle in case you are not around..
It is said that the earlier you invest in a term insurance plan, the more beneficial it is as the amount of premium are cheaper than when bought earlier. While deciding the policy period, keep in mind your retirement age and the amount of life cover you will require.
Track Record of the Insurer
It is crucial to find out whether the insurer will pay the assured sum’s amount to your family. Therefore, always check the financial background of the company. You should do a thorough research about the company you are planning to buy your term insurance from.
You can choose a lump sum payout or periodic income payout option while you invest in a term insurance plan.
How You want to Pay Your Premiums
The investor should have the flexibility to pay premiums as per their convenience, i.e., monthly, quarterly or yearly.
You should keep the points mentioned above in mind before purchasing a term insurance plan. You should go for a reputed and top-rated company for a smooth investing experience in the term insurance plan.