Should you reach out to any financial planner, most of them will recommend you buy a term plan. Adding a term plan to your financial portfolio has a lot of advantages and offers you coverage against one of the biggest risks that a person can come across. Before we get into the details of the plan, one must acknowledge the fact that life is the most important asset that a person possesses.
Any individual for that matter must buy protection against the single most important risk i.e. death. Its importance grows several folds when the individual is also the bread earner of the family. A term plan is then, the simplest insurance policy that you can buy and the easiest to understand as well.
A policy holder pays a certain premium to an insurer and they in turn offer life cover for the individual. Should a policy holder lose his/her life during the term of the plan, the nominees will receive the sum assured as per the policy documents.
There are a few tips that can make the entire buying process a bit easier for you. Here are some of them.
- Buy Early
Most of the insurers offer term plans for a wide age range. Just for reference, some insurers offer the plan for someone as young as 18 years old and for someone as old as 75 years old as well. While there isn’t any restriction on age, it is always a better idea to buy a term plan early in your life. The simple reason is that you will end up paying fewer premium. With increasing age, the probability of risks or medical conditions also increases, thereby pushing the premiums higher.
- Avoid Single Premiums
While quite a few of the insurers offer you to buy term plans with a single premium, it is not recommended. While paying at a single shot might entice some, it is not the most practical solution. Paying yearly premiums is the easiest way to go for a term plan.
- Accurate Information
Insurers these days offer slightly lower premiums for non-smokers. It is crucial as a potential buyer to provide all the information as accurately as possible. If you are a smoker, you might get away with saying that you are a non-smoker while buying the policy. However, the insurer might reject the claims at a later stage due to this very reason. Thus, it is important to offer all information as accurately as possible.
How to Choose the Right Term Plan
Here are a few steps that will help you to decide the right term plan.
It is important to know the right cover for your term plan. Whether you are the sole earning member of the family or support the family in some ways, it is crucial that you spend some time to decide the right cover. You must consider the monthly expenses of the family at the minimum and then factor in any liabilities against your name. A quick addition and you should be able to come to a number that will suffice as the sum assured.
One of the better ways of finalizing an insurer for a term plan is to look at the CSR or claim settlement ratio of the insurer. A CSR provides you with an insight as to how the insurer has been performing when it comes to claims. The number indicates how many cases the insurer has settled versus the total number of claims that it had received. A higher number signifies that you will most probably have a hassle-free experience with an insurer.
Most of the insurers offering term insurance plans offer a lot of riders as well. A rider is an additional capability that you can add to your term plan by paying the extra sum assured. If you feel that your policy does not cover enough grounds and that you need additional coverage, you can opt for riders. However, it is not mandatory to buy a rider for a term plan. You must opt for them only if they add value and offer something that you need and is not present in the vanilla plan.
Best Term Plans Online
It does not take a lot to understand that there are a lot of insurers offering term plans in the country. However, if you wish to buy the best term plan, comparing them on certain websites if your best bet. Comparison websites like Coverfox.com offer you a lot of information and visual indicators which will help you take the smartest decision. Also, when you buy term plan after comparison, you stand to save a considerable amount of money in premiums.