Purchasing a term insurance policy to secure your family is an important financial decision. It can help your loved ones pay off debts, accomplish the necessary financial commitments and live at peace. And, in such an uncertain global world, term insurance becomes an ultimate necessity. Insurance companies have been customising the term plan features to help every policyholder benefit maximally. Therefore, choosing the right term insurance cover is certainly vital! Here are 6 ways you can choose to do so!
6 Ways to Choose the Right Term Insurance Cover
Here are 6 ways you can choose the right term insurance cover:
Deciding on the required term plan cover
Choosing the optimal life cover is one of the ways to decide on the term insurance policy. To calculate the necessary term life cover, you can account for the following expenses:
- Household expenses that include utility bills, groceries, fuel expenditures, etc.,
- Short-term and long-term financial obligations such as your child's education and marriage
- Liabilities such as personal loans, education loans, house loans and car loans
- Approximately calculate these values, account for the inflation rate and from the total expenses, subtract any liquid savings and investment funds that will prove beneficial and finally derive the necessary term insurance cover to help sustain your loved ones adequately in your absence.
Choosing the right premium and policy term plan
You can choose the premium based on the required life cover. While ascertaining the premium, consider your current income levels to understand if you can accommodate the cost comfortably. Also, decide on the policy term based on the age until you require the term insurance benefit to secure your family.
For instance, after you become a senior citizen, your children might take care of their living, and you can have an annuity plan in place to secure your finances until death. Also, if you choose to invest in a term plan early in life, you can benefit from choosing a longer policy term at an extremely affordable premium rate.
Decide on the payout options
Term insurance plans provide different payout options to help you benefit from the life cover based on your requirements.
For instance, Tata AIA Life Insurance term plan provides the option to choose between a lump-sum payout, regular income for a defined income period or the combination of regular income and the lump sum.
So, if you feel your loved ones may not handle the lump sum amount wisely, you can always opt for the regular income option. Also, you can choose the return of premium1 benefit to receive a complete refund of the premium paid when the plan matures. It will ensure your term insurance plan serves as a savings benefit while securing your family in your absence.
Consider the flexible features
When choosing a term insurance plan, you must look for flexible features. It will help you modify the plan based on your changing financial needs.
For example, your term insurance can have the option to increase the life cover at different stages of your life, such as when you get married, have children, build a new house, etc.
Also, insurers offer flexible premium payment options such as paying it for a limited term or monthly, quarterly, semi-annually or annually throughout the policy term.
Understand the add-on rider# benefits
Rider# options are always an added advantage. It will provide an additional sum insured in case of specific occurrences in your life.
For example, Tata AIA Life Insurance Non-Linked Comprehensive Health Rider(A Non-Linked, Non- Participating Individual Health rider, UIN:110B031V02)# offers additional coverage against risks such as critical illnesses, accidental disability, etc. You can choose to receive the payout as a lump sum, monthly income for 10 years or as a combination of lump sum and fixed income.
Therefore, if you happen to get affected due to a critical illness such as cancer, you can get a lump sum for the initial treatment and a fixed income regularly for paying the chemotherapy expenses.
Choose the riders# smartly and wisely based on your family's medical history. For instance, if your father had been affected due to cancer in the past, it is important to have the rider# pay for the hospitalisation and other medical expenses if required in your life anytime! And if the payable insured amount is more than what is ideally required to pay for the medical expenses, you can use the surplus to clear off any debts.
Research on the insurer's reliability
Choosing the right term insurance with adequate life cover and the necessary flexible features will benefit you when you choose the right insurer. You can compare the different options by considering the cost, features and claim settlement ratio. Also, check if you can access the features and purchase the term plan online to make it more convenient and cost-effective.
By analysing these ways, you can choose the right term insurance plan for your life. It helps you afford the cost conveniently, ascertain the fund required for your family to survive and enhance the features if necessary.
Term insurance plans with enhanced benefits prove beneficial as future financial security for your family. However, while it is considered a valuable thing, it has to be done right for maximum protection.
First, estimate the right amount of life cover, required payout option and a comfortable premium and policy term primarily. Then, understand the riders#, flexibility of the features and the insurer's reliability to choose the apt term insurance plan for your financial needs!
Finally, and most importantly, invest early and choose a long policy term to stay protected and secure your family anytime!