Term insurance is one of the crucial financial decisions that impact you in the long haul. The insurance you choose will protect your loved ones in your absence. This makes buying term insurance one of the most important financial decisions. There is no single best term insurance plan for all, and you need to get the right one tailored to meet your needs. While browsing different term plans, here are some points that you should consider:
Choose the right coverage
For any life insurance, choosing the right amount of coverage amount is key. What is a term plan? Life insurance provides low premiums for a huge coverage for a fixed tenure. Being a policyholder, you need to take into consideration your dependents and other financial responsibilities to determine a coverage amount. Also, take into consideration any loans or debts you have. Sufficient coverage ensures that your family will not face any financial insufficiency in your absence.
Select the right term
The ‘term’ of your term insurance is one of the crucial decisions you need to make before buying a plan. You need a careful evaluation while determining the tenure of your term insurance to ensure that you are not under-insured. Depending on your liabilities, dependents, financial goals, and future projections, you need to estimate the tenure of your term plan. For example, if you are in your 20s and you want to be covered until you are 60, you can select a huge tenure accordingly. It is always advisable that you insure yourself for enough years to avoid buying insurance at a later age. This is because if you exhaust your term plan, buying a life cover at a later age would be quite expensive.
The earlier you buy, the better
At a young age, buying life insurance would be the last thing on your mind. However, if you think about it, it is the best age to buy one. Even if you have no financial liabilities or responsibilities, things will not stay the same later, five years ahead, or ten years ahead. The more you delay the purchase of your term plan at a later age, the more expensive will be your premium. Life insurance works simply as more people die when they get older. Hence, as individual ages, their premiums increase. If you buy a term plan at a young age, you lock the term insurance benefits at a low premium.
Look at all the options
These days, there are several insurance companies that offer several term insurance policies. It can be tempting to buy the first good deal you find. However, it is important to see what else is available out there. Compare the different options you like, evaluate their features and benefits, and then select the one that meets your needs.
Honesty pays in the long haul
Policyholders avoid disclosing information about themselves that would affect their premium. Be it their habit of smoking or drinking, family history, or any other illnesses they have before buying insurance. The policyholder may be happy by paying lower premiums. However, the purpose of insurance is to get protection against unforeseen circumstances. Intentionally hiding such information may lead to rejection of the claim altogether. This negates the entire purpose of having term insurance. Hence, it is important that you disclose all the information honestly to your insurance company. Even though you have to pay a higher premium now, in the bigger picture, you stay protected and will receive all the benefits.
Check the riders offered
When you buy term insurance, you get the option of adding riders to your base plan. Riders are add-on covers that you can opt for by paying an additional premium. Some of the common rider options to choose from are disability, accidental death, or critical illness. It is essential that you choose the add-on term insurance benefits that cater to your specific needs.
The name matters!
When you are buying term insurance, the name of the insurance company, the goodwill, and the reputation they hold matter a lot. Since term insurance plays an important financial role for you and your dependents, you do not want to buy insurance from an unheard brand. Also, check the claim settlement ratio as it reflects the number of claims an insurance company has settled out of the ones that they received.
Read the fine print of your term insurance policy to remove any room for doubts or errors. Knowing about the terms and conditions of the policy helps during times like filing a claim. Also, ensure that the details of yourself and your nominee are filled in correctly.