When planning your future finances, it is necessary to find the perfect balance between insurance and investment. While there are a plethora of investment options available in the market, choosing insurance can be tricky.
Among the life insurance products in India, term insurance happens to be the most affordable one. A term insurance plan primarily focuses on securing the financial future of your loved ones in your absence. It pays a lump sum amount as the death benefit to the beneficiaries of the policy. But that’s not it. Choosing the right term insurance can be overwhelming.
So, to select an appropriate term insurance plan for future financial security, it is necessary to compare different policies based on the following factors.
- The sum assured amount
The sum assured amount or the coverage of the term insurance plan should be enough to cover the finances of your family in your absence. To understand how much coverage you should ideally opt for, answer these questions –
- What is your current financial situation?
- How much are your current expenses?
- What are your future financial objectives?
The answer to these questions will help you determine how much sum assured amount should you opt when buying term plans in India. Furthermore, use the term insurance calculator to determine the premiums charged on the chosen sum assured.
- Term insurance tenure
As mentioned earlier, term insurance helps safeguard the financial future of your family in the event of your death. So, it is necessary to opt for a longer tenure that at least covers your working life.
On the other hand, if you are worried about the premiums charged on the policy, it is wise to buy term plans at an early stage in life. The term insurance premiums are likely to be cheaper in your 20s as compared to your 50s.
- Claim settlement ratio of the insurer
The claim settlement ratio is nothing but the rate of total claims settled against the total number of claims received by the insurer in the given financial year.
This value helps you understand whether your chosen insurer is capable of settling your claims in the near future. It is recommended to select an insurer with a high claim settlement ratio as the chances of them being able to pay your term insurance claims are high.
- Term insurance rider benefits
Typically, term insurance plans in India are known to offer death benefits only. But to enhance the scope of the policy, insurers provide a few rider benefits as well. Some of these include –
- The return of premium benefit
- Critical illness benefit
- Waiver of premium benefit
- Accidental death benefit
Know that each rider benefit you opt for will increase the premium amount alongside. So, it is best to select the add-ons that you think will come in handy in the future.
Wrapping it up
For people who are planning to invest in term insurance, make sure that you compare different policies online based on the factors explained above. Based on the comparison results, you will be able to shortlist a plan that fulfils yours and your family’s financial needs.