Life is full of uncertain events, without warning. A life insurance plan can act as a cushion for your family's financial security against such uncertainties. Such a plan will act as the income replacement for your family members.
However, when it comes to taking the final step of purchasing a term plan, most of us are often confused about the amount of life cover to opt for, policy period, which insurer, and what plan to buy? To help you make an informed decision, here are a few tips.
Your dependent family members may vary at different life stages. Financial responsibilities of a single person are the not the same as that of a married one or one with kids. The cover amount should be chosen accordingly. Don’t forget to keep an eye out for the future and plan for increasing financial responsibilities.
While keeping in mind the dependent family members, the extent of cover largely depends on the current lifestyle of your family. Assess the amount of funds required to sustain your current lifestyle, don’t forget to factor in inflation, and accordingly plan the life cover.
Whether you are the sole breadwinner of the family or a contributing member to the collective income of the family, go for a cover amount that is equivalent to the amount of income required to sustain the everyday bills for your family.
Earning individuals are often under the burden of existing liabilities such as short term loans, personal loans, home loan, and car loan. To prevent the burden of EMI repayment from falling on your family it is essential to include the amount repayable of outstanding loans in the life cover availed.
To live up to their promise of offering monetary reimbursement, Life Insurance Company should have an effective claims settlement process. Claim Settlement ratio is the numerical value representing the number of claims settled against those filed. Higher the claim settlement ratio, better are the chances of availing the entire sum assured amount. At Max Life, 98.25% of the total individual death claims were settled in FY'18 (Src: IRDAI Annual Report, 2017-18).
Apart from the death benefit extended by a term plan, some plans offer additional cover in the form of riders. Riders like disability cover, loss of employment cover, waiver of premium cover, can be added by paying a small amount of added premium. These riders add considerable value to the basic term plan purchased.
Start by creating a quick quote to understand the interplay of all these tips and choose the most suitable cover for your family's future.