Having life insurance is essential for a complete financial portfolio, especially if you have dependents. To secure the financial future of your loved ones, make sure to get life insurance coverage as a top priority.
A basic term insurance plan is essential for your portfolio. Why? Because in exchange for a premium, it provides you with life insurance cover with a high sum assured on your unfortunate death. For example, if you pass away unexpectedly during the policy term, your nominee(s) will receive this sum assured as a death benefit. One of the most cost-effective types of life insurance is a term insurance plan, which is why so many people choose it when purchasing a policy! But there are some things you must look out for while getting a term insurance plan.
Things to consider while buying a Term Life Insurance Plan
If purchased with careful deliberation, a term insurance policy can offer your family a reliable financial safety net. On the other hand, insufficient life insurance cover can make your term plan useless. Here are some factors you should consider when buying term insurance. Below are the key factors to remember:
Your term life insurance coverage should take a broad view of the amount of money your family will require in the event of your untimely demise. Usually, a sum that is 10-15 times your annual income is considered appropriate, but you should take into account any debt (house loan, personal loan, etc) that might become a burden on your family in your absence. So the cover amount should be able to take care of your family’s monthly expenses, cover any liabilities, and should enable your family to fulfil their life goals.
Determine The Tenure Of The Plan
Once you have determined how much coverage you require, it is crucial to know how long you will require it. The duration shouldn’t be too short because the coverage could expire before you have paid all your debts. However, the tenure should not be very long because it would result in an excessively high premium.
Determine by what year your liquid net worth, or the total amount of investments you have in mutual funds, provident funds, stocks, etc., after deducting your liabilities, will be greater than the term life insurance cover that we have calculated in the earlier section. This is the correct way to estimate the tenure of your term insurance plan.
The age up to which you require coverage should be the one where these two values are equal. After that, your assets will be sufficient to provide for your family while you are away.
A term insurance plan’s optional perk that gives you more coverage is the ability to pick suitable riders. These riders have the potential to offer extra benefits in addition to the advantages of basic life insurance coverage. The riders listed below can be simply selected based on your needs.
Accidental Death Benefit Rider
If you have a job that has a degree of occupational hazard associated with it, then this rider is for you. This rider ensures that if you die in an accident, the nominee will receive additional amount of the sum insured. Without this rider, if you perish in an accident, your nominee is only entitled to the base amount of the sum assured. However, with the addition of this rider, you can ensure that your nominee will receive an additional amount as an accidental death.
Critical Illness Benefit Rider
What if you experience a loss of income due to medical reasons? A base term plan will not provide any relief in that case. This rider pays out a sum assured if you are diagnosed with one of the critical illnesses listed in the rider’s terms and conditions. Cancer, renal failure, stroke, heart attack, paralysis, and other serious illnesses are some of the major critical illnesses covered by critical illness riders. Make sure you understand the inclusions and exclusions of the rider at the time of purchase.
Accidental Disability Benefit Rider
Apart from a serious illness, a disability caused by an accident may also result in a loss of income for you, and that is what this rider covers. Under this rider, you will get financial help if an accident leaves you partially or totally disabled. The payout is usually a percentage of the sum assured of the base policy, but that may vary from one insurer to the other.
This premium waiver rider ensures that a term plan is not terminated even if you are unable to pay the payments going forward. For example, this rider may be used if you experience a loss of income due to a disability or a critical illness diagnosis. If you encounter such a situation, you may request a waiver of premiums for upcoming premium payments, so that you can continue enjoying life cover till the end of the policy term.
If you are unable to continue working due to a severe illness diagnosis, an accident, or death, the income you give to your household will cease.
A family income benefit rider assures that your family is not financially harmed in such instances. This rider pays out a percentage of the sum assured each month for a set length of time.
Some companies like Edelwiess Tokio Life Insurance offer this rider, which acts as an additional health cover Today, hospitalisation can be expensive, but the true issue is the costs associated with recovery and rehabilitation. You can choose this Rider to help you overcome these obstacles. With this, you get a Daily Cash Benefit from the first day of hospitalisation. In addition, for each day spent in the ICU, you will get a small percentage of your Sum Assured value. As a Recuperating Benefit, you will additionally receive a lump sum payment upon your hospital discharge.
Choose the Right Insurance Provider
Selecting the appropriate insurance provider is another important aspect you should consider before purchasing a term insurance plan. Considerations including the insurance company’s experience, client feedback, claim settlement ratio, solvency ratio, and financial stability are crucial. In addition, you can select from a variety of appealing plans that are comprehensive and personalised, for instance, if you decide to go with a reputable business-like Edelweiss Tokio Life Insurance.
Know The Claim Settlement Ratio
The claim settlement ratio (CSR) of an insurance business is the proportion of claims satisfied to all applications received during a fiscal year. Term insurance is meant to safeguard the financial future of your family. Therefore for peace of mind, pick an insurer with a high CSR. While a CSR of 95% or higher is seen as favourable, you should contrast it with the industry average based on data provided by IRDA, India’s insurance regulatory body.
Before you buy a term insurance plan, be sure to first understand your requirement in addition to using the five considerations above. Researching online is the easiest way to look for information about different policies and easily calculate the cost. Don’t wait to purchase a term insurance policy to protect your family’s future, act promptly and with the proper documentation.
For your comprehensive term plan requirements, you can check out Edelweiss Tokio Life Insurance. their Zindagi Plus term plan offers a better half benefit (to include your spouse in the plan) as well as discounts on large sum assured. You can also get lower premiums if you choose to buy the policy online. So don’t wait! Get your term plan with suitable riders today!
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