A Detailed Guide to Term Life Insurance Policy

As the world faces the coronavirus pandemic, we realize the importance of having a life insurance policy that can prepare us for such uncertainties. People are increasingly aware of the importance of a good life insurance product to protect their family’s lives as well as the future.

The objective of life insurance is to offer optimal coverage to the insured and also to ensure the financial security of the family of the insured. However, with the ever-changing life insurance industry, a wide range of products have been added to the repository. As such, one can feel confused and overwhelmed when choosing the right product.

If you are a beginner and only want the most basic protection, you should consider a term life insurance policy. These policies are pure life insurance instruments that offer the broadest coverage at an affordable price.

For the purposes of this article, we will tell you what a term life insurance policy is, the benefits of youerm insurance comparisonand how to choose the right one.

Read on to find out more.

What is term insurance and how does it work?

As mentioned above, a term life insurance policy is the purest and most affordable life insurance product. It pays an insured sum to the beneficiary if something happens to the insured during the term of the contract.

The coverage of a term life insurance policy is only valid for a predetermined period of time, known as the term of the policy. If the insured survives this period, the insurer is not required to pay benefits. But if you want benefits when your term plan matures, you might consider investing in a term plan with a return of premium that refunds premiums to you if the policyholder survives that term.

Things to Consider When Buying Term Life Insurance

If you’re ready to invest in a term life insurance policy, here are a few things you should keep in mind:

  • Assess the coverage you need

The sum insured is the death benefit that the beneficiaries will receive after the death of the insured. This sum should be chosen carefully as it is intended to replace income after the loss of the breadwinner. Therefore, you must assess the needs of your dependents, consider all long-term financial goals, unpaid debts, as well as inflation when choosing this amount.

A policy term is the number of years the policyholder will be covered by the term life insurance policy. You must choose the mandate according to your income, your age and the duration of your financial debts.

  • Check the insurer’s claims settlement rate

The best way to determine the reliability of an insurer is to check the claims settlement rate. This ratio will show you the percentage of claims settled by the insurer compared to the number of claims raised in a given year. Look for a provider with a claims settlement rate of over 90%.

You can increase the scope of your policy by supplementing it with endorsements. These additional benefits will cover you against additional risks that can be used for a nominal payment. You can choose from a wide range of riders, such as critical illness, accidental death, disability, etc.

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How much coverage do you need?

According to financial experts, the ideal sum insured is at least 15 to 20 times your current annual income. So, if you earn Rs. 5 Lakhs per year today, then your term insurance should be at least Rs. 75 Lakhs to 1 Crore. However, you should be able to extend this coverage in case you take on more responsibilities in life. Therefore, your term life insurance policy should also be able to pay off outstanding loans in addition to other day-to-day expenses and long-term goals.

Tips for Buying a Term Plan

You can purchase a term plan online or offline with the help of an insurance agent. Here are some steps to follow if you choose to buy your policy online:

  • Calculate the exact sum insured using term insurance calculators provided by most insurers.
  • Find the plan that suits your budget and needs precisely.
  • Read the fine print to understand the inclusions and exclusions of your term life insurance policy.
  • Browse plans online and compare policies with features, benefits and premium costs before making an investment. The term plan comparison tool gives you an objective view to help you make an informed choice.
  • Choose the type of coverage you need, the riders that best suit your needs, the premium payment method, the payment method, and more. These considerations will help you customize the plan to suit your needs.
  • Declare all the details about yourself and your lifestyle with precision. Failure to do so will result in the rejection of the claim if the insurer finds an anomaly.
  • Upload all documents required by the insurer

The term life insurance policy is an important investment to protect your loved ones against uncertainties. Consider buying one today if you haven’t already.

Authors biography :
Vinod Gill is a writer specializing in writing content on insurance and finance topics. He is a digital marketing consultant, blogger and co-founder of Journalist.