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How to Identify Term Insurance According to Your Needs?

  • 17th Jul 2018
  • 990
How to Identify Term Insurance According to Your Needs?

We can never foresee the future or any untimely occurrence for that matter. Hence, it is crucial for us to plan and provide financial security to our loved ones so that they can embrace a secure future.

Having said that, there are several insurance products available in the market today. They provide a variety of deliverables tailored to fit numerous requirements. And, amongst this comprehensive range of insurance products, term insurance plans qualify as the most prominent ones. In case of an untimely passing of the policyholder within the set tenure, they offer pure life cover or financial security to the beneficiaries. However, no such maturity benefit is rendered if the policyholder outlives the pre-defined tenure of the plan.

Such plans can truly help a policyholder’s beneficiaries sustain a secure future. But, when it comes to identifying the most suitable term insurance, one must always carefully consider and evaluate the following factors:

1. Purchase a plan as per your needs

While it may be a good idea to hear what experts and peers’ have to say, selecting a term insurance plan should always be based on your own independent needs.

2. Consider the number of family members and your income bracket

Your total income, and the number of dependent family members should be given careful consideration while choosing a term plan. Since the financial responsibilities may vary depending on the marital status of the policyholder, the coverage amount should be chosen accordingly. Moreover, this could aid your future financial planning.

3. Take your family’s lifestyle and growing inflation into account

While considering the number of dependent family members, you simply cannot miss assessing your family’s current lifestyle cost. The extent of the term plan’s cover should be based on your family’s lifestyle sustainability, and also in the growing inflation cost.

4. Take your liabilities into account

A majority of the people often possess a certain number of liabilities such as vehicle loans, personal loans, home loans, business loans, etc. Hence, in order to thwart the possible burden of loan repayments that may befall on your family members’ shoulders, it is extremely important to mention the repayable loan amount in the opted life cover.

5. Use riders for enhanced coverage

Besides the death benefit provided by the basic term plans, you can also look at the numerous term insurance benefits offered by other plans. Certain policies allow you to add riders to enhance your cover and minimise your risk. These may include riders, such as loss of critical illness cover, employment cover, disability cover, and more. You may even find a term plan with return of premium option being available in case the policyholder outlives the policy’s specified tenure.

6. Opt for an insurer with higher claim settlement ratio

When it comes to monetary reimbursement, it is only essential to look for a plan with an effective claim settlement process. A higher claim settlement ratio by the insurer would endow the beneficiaries with a greater chance to receive the entire sum assured.

Keeping all these factors in mind, it would be wise to better understand your insurance needs and carefully choose the right term plan for you.

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