Tips for Choosing the Best Term Insurance Plan
When you start earning, the first advice you get from most adults is to start saving early. Such discussions would generally include the mention of financial planning, tax saving, and investments like insurance plans. Now when it comes to insurance plans, there are different plans available for different life goals and needs; an integral one among them is term insurance. If you are a beginner, let us understand the basics of term insurance plans and how you can choose the best term insurance.
What is Term Insurance?
Term insurance is a pure life insurance plan which offers a fixed sum assured as a death benefit to your nominee(s). In case anything happens to you in the future, term insurance is a way to ensure the financial security of your loved ones. Some term insurances offer a life cover up to 100 years of age and the death benefit (sum assured) paid out to the nominee is tax exempt.
Why Use a Term Insurance Premium Calculator?
Ideally, the term insurance plan you buy should provide sufficient cover to pay off your ongoing liabilities and take care of your nominee(s) anticipated financial needs, in your absence. In light of that, there are several aspects to consider before selecting a term plan, such as your age, existing loans, other existing insurance plans, annual income, etc. The best way to identify the amount of life cover needed is by using a term insurance premium calculator. With the help of this financial tool, it becomes easy to buy a term insurance policy online.
Tips for Choosing the Best Term Insurance
Making an informed decision is imperative when buying term insurance. Here’s what you should consider: –
- Understand your age and the people who depend on you financially
When you start early, the number of financial dependents will be less in number. On the other hand, if you’re selecting a term insurance plan at a later stage, there might be more people, such as your spouse and children, who depend on you for financial support. Based on this, you can select an insurance plan that suits your current requirements.
- Assess the Right Life Cover for Your Needs
Individuals often end up buying term insurance plans with higher premiums in order to have the highest possible life cover. This can be avoided by using a term insurance calculator – it helps you understand the sum assured that suites to your life’s circumstances when buying term insurance online.
- Calculate your existing liabilities
Ongoing liabilities are something that you must factor in while buying a term insurance policy. Consider this; in case of an untimely demise, the policyholder’s loved ones will have to bear the brunt of repaying his/her ongoing loans. Having a term insurance policy that accounts for this can alleviate financial worries at bay for your loved ones.
- Check the Claim Settlement Ratio of the Insurer
A key criterion while selecting a term insurance provider is to check their claim settlement ratio. This claim settlement ratio is determined based on the number of claims the company receives within a year against the number of settlements it makes. As an insurance buyer this helps to understand how many claims the company honors each year. The higher this ratio the more trustworthy the insurance company is.
- Check for the Solvency Ratio as well
The solvency ratio of an insurer indicates financial outlook and operational cash flow to be able to process various claims, thereby being capable of resolving even complicated issues. For instance, in case of a natural calamity, such as an earthquake where there are mass calamities, the insurance company might have to settle multiple claims quickly.
Therefore, a company with a high solvency ratio can settle multiple claims easily compared to one with a lower ratio.
- Provision to add Critical and Terminal Illness Covers
Nowadays, critical illness and terminal illness riders can augment term insurance plans to expand the scope of coverage. With such riders in place, if the insurance holder is diagnosed with a critical or terminal illness, then the sum assured under the rider can be paid by the insurance company to take care of the medical expenses involved. Utilize a term insurance premium calculator and estimate the future financial needs of your loved ones. Keep the above tips in mind to buy term insurance online today.