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A term plan offers a lump sum amount to your family in case of your untimely demise. The sum assured, which is received as reimbursement through the plan, helps meet the basic financial needs of your family members.
There are many term plans available in the market. The abundance of options makes it difficult for the common man to choose the most suitable plan. To make this search easy and convenient for you, you can follow this step-wise approach:
Step 1: Assess Your Needs
A term insurance plan has to be sufficient for your family’s needs in your absence. Keeping this in mind, assess the sources of income, number of dependents, existing debts and liabilities, and the expenses incurred to sustain their current lifestyle. Furthermore, if you are planning for your child’s education, marriage, or pension for your spouse, then the amount invested on a periodic basis in these instruments also needs to be considered. Click here to calculate the amount of cover you need.
Step 2: Compare Quotes & Choose the Term Plan Variant That Works Best for You
There are three types of term plans; basic term plans, term plans with monthly income and term plans with increasing monthly income available in the market.
The premium paid towards the purchase of term plan will vary as per the cover amount, cover duration, type of plan, your age, gender and smoking habits. Therefore, to get the best deal on your plan, a thorough comparison of quotes is recommended.
Step 3: Check Claim Settlement Ratio of the Life Insurance Company
As you select the optimal plan, do not overlook the possibility of the insurer not sanctioning the promised sum insured to your family members. This is why you should check the claim-settlement ratio, expressed in percentage, to know which insurer best settles claims and to what extent. At Max Life, 99.34% of the total claims were settled in 2017-18 (Src. Max Life Public Disclosure FY17-18).
Step 4: Factor in Inflation
While age and cover duration are the key factors to be kept in mind when you purchase a term plan, don’t forget to account for the impact of inflation on lifestyle needs. To avoid inflation from biting a significant share into your sum assured amount, it is recommended to opt for a term plan that provides protection against inflation.
Step 5: Look for Riders
Riders help enhance the scope of protection extended by the term insurance plan. Several insurers offer the provision of attaching riders to the term plans, thereby increasing the level of protection. For instance, Max Life offers the Comprehensive Accident Benefit rider along with their term plans where the insured will receive additional protection benefit in case he suffers from partial or total disability due to an accident.
These are the five easy steps to choose the best term plan in 2016. Follow them, create a quick quote and secure the future of your family financially today.