5 Simple Steps to Buy a Term Insurance Plan

 

Term insurance is a simple type of life insurance that provides financial support to your family if something happens to you during the policy period. Term life insurance offers fixed premium coverage for a fixed period. You get a higher life cover (i.e., insurance) at a relatively low premium rate. While both protection and investment are part of traditional life insurance plans, term insurance plans are pure protection plans. However, compared to conventional insurance plans, term plans provide significantly more affordable coverage. In this article, we explore the steps to buy term insurance and the key points to keep in mind when evaluating a plan.
 

Steps to buy term insurance online

Below are the steps to buy term insurance.
 

Step 1: Identify your needs

First, you need to identify and calculate the amount your family needs in case of your absence. You can start with your sources of income, the number of dependants, the loans you have, and your expenses. All these will help you calculate an amount that requires life cover.
 

Step 2: Compare quotes and select a suitable term plan variant

Term insurance plans are offered in various forms; hence, the premium rates can differ based on the premium amount, term of insurance, age, lifestyle factors, and plan variant. Compare quotes offered by different insurers and pick the one that suits you.
 

Step 3: Examining claim settlement ratio

Before choosing a plan, consider checking the claim settlement ratio offered by the insurer. The claim settlement ratio refers to the percentage of claims settled and processed against the ones that have been received.
 

Step 4: Consider inflation

Expenses may rise as time goes by; therefore, you should factor in inflation while you select your policy amount. Some term plans include features that can help adjust the coverage over time.
 

Step 5: Explore rider options

Riders^# are additional layers that can be included with your base term plan. You may have options like accidental benefit riders or critical illness riders. These riders might prove useful at certain times. You can evaluate these riders and then decide which suits your needs.
 

 

The benefits of term insurance

● Death Benefit

● Tax* Benefit

● Rider Benefits (additional to basic plan)
 

Key terms when comparing term insurance plans

● Disbursement amount of the plan

● Amount of the premium

● Terms and conditions of the policy

● IRDAI-approved settlement ratio

● Additional benefits offered
 

Factors affecting term insurance plans

● Age

● Gender

● Medical history of the family

● Smoking and drinking habits

● Profession

● Duration/policy term

● Personal health
 

How to choose the right term insurance plan

Here are the steps you should follow to select the right insurance term for you.
 

Determine if you require insurance

Term insurance isn’t self-beneficial; it is the fund your loved ones can use if you are unable to meet their needs. If no one is financially dependent on you, you have no debt, and your assets are enough to pay off your liabilities, you probably don't need term insurance. However, if you have a family and your assets are on the lower side, an insurance policy should be taken. This depends on your family’s requirements, income sources, the liabilities you currently have, the amount required to maintain the current basic lifestyle, and the assets you currently hold.
 

Choosing the right company

It is important to choose the right insurance company, as you put all your savings in the company’s hands, trusting that it will secure your family’s future. To choose the right insurance plan, first, compare the policies of leading companies; remember to choose a plan that corresponds to your financial plan, and do not go overboard. Also, remember to choose a company with high goodwill and trust. Verify their claim settlement ratios provided by IRDA (Insurance Regulatory and Development Authority). For more details, check the company’s complaints, reviews, and customer service quality.
 

An insurance that fulfils your needs

Choose a term plan that fits your budget and provides the maximum benefits. Don’t rush such decisions, as this is about securing your family’s long-term future. Basic term plans, term plans with monthly payouts, and term plans with lump-sum payouts are the three forms of term plans available in the market. While a lump-sum payment plan covers your immediate financial obligations, monthly income is needed to keep the family afloat. It is important to look at exactly what is covered in your policy, as there are various terms and conditions one may overlook. And when the time comes, you get to know that the claim is not eligible for settlement.
 

Additional benefits (riders) to the policy

Opt for the normal term insurance, and then you can customise it according to your needs and extra precautions against factors, such as accidental death cover, critical illness, disability claim, etc. Some term insurance plans have pre-included additional benefits, while others have optional choices that can be included according to your needs. As a result, in the latter case, you have the option of attaching the desired riders to the basic policy rather than taking a readymade policy with riders, which you may or may not find useful.
 

Option to pay the premium

In the thought of securing the future, don’t ruin your present. Think as per your needs if you can pay the premium annually, half-yearly, quarterly, or monthly. Some insurance policies give additional discounts on annual payments as they get the lump sum amount on such policies. The premium shouldn’t be a burden on your pocket. It is recommended to choose a premium in the range of 20% to 30% of your total income.
 

Thus, as people are becoming more aware of term plans and their benefits, such as less premium payable than life insurance, term insurance tax benefits, and an assurance on the family’s future, they are opting to secure their futures by buying such plans at a premium.

Conclusion

A term insurance plan can be useful for ensuring that your family's needs are met in your absence. To make choosing a term plan easier, ensure that you know what factors are important. It also helps to consider how your lifestyle, age, and future expenses may influence the coverage you pick. Considering these points, you can choose a term plan that aligns well with your long-term financial goals. Taking the time to compare options calmly can make the decision more straightforward and better suited to your situation.