In the younger days, nobody thinks about death very much, but the sooner we realise and accept the fact that death is natural and inevitable, the better it is for us. It may happen to anyone, anytime, any day. So, it should be in our best interest to take measures to protect our family in case of our absence. We all need to have a backup plan to provide financial stability to our family in case of one’s demise.
One can start by buying a term insurance plan which will provide financial support to his family in case something unexpected happens. Term insurance plans are affordable and straightforward. As inflation rises, the cost of basic amenities of day to day life such as education, transportation, medical health care plans seems to be inflating with time. Hence, it is only justifiable to take certain precautions beforehand, such as making a term insurance policy that would cater to and enhance the smooth functioning of the family in one’s absence. One should always choose the best term insurance plan from all the options available.
Things You Must Consider Before Buying A Term Insurance Plan
Most term insurance policies provide various kinds of solutions so that one can choose according to one’s needs. Many buyers do not have much idea about how to choose the right term insurance plans for themselves. So, below are a few parameters to be considered before buying a term insurance plan.
Premium Rates
The premium rates may vary from person to person depending on their age, size of the family, habits and medical history. For some policyholders, the premium may be as low as INR 500-600 per month, so, people do not have to spend much part of their salary on the insurance. We should also consider plans that lower the premium rates as we age more and come close to retirements.
Cover Amount
The younger we are at the time of making the insurance policy, the higher the coverage amount should be. Ideally, if one is of the age of 25-35 years, then the coverage amount should be about 15 times the annual income, and if an individual is of the age group of 45-55 years, then the coverage amount should be at least ten times of his salary. The liabilities of an individual should also to be taken into consideration before settling for coverage provided by the company.
Choosing a plan
There are various kinds of plans available in the market catering the different needs of an individual. There are single life cover plans for sole earners of the family and plans to cover one’s spouse under a joint life policy. In most cases, it is profitable to choose the base policy because other plans are designed for specific situations and are not better than the base policies. We can also create a claim for critical illness as per the requirements of the individual.
The right insurer
There are many insurance companies in the market providing several kinds of policies; hence, it is necessary to make sure that we go for the right insurance provider according to our needs. Before buying a policy, an individual must check the solvency ratio, claim settlement ratio, market reputation and financial background of the company from which the insurance is bought. We need to make sure that we also check the reviews available online or elsewhere to verify the insurer’s reputation and claim settlement with the existing policyholders.
Policy periods
It is always advisable to make term insurance policies at young ages as with better fitness, the more extended policy period is availed and once fixed, the premium remains the same for the entire term policy. For instance, if an individual belongs to the age group of 20-25, then a term of 40-45 years is advisable and if an individual is in his 50s, then a term of 12-15 years is preferable. An insurance company covers people up to the age of 75-80 years.
Disclosure of medical history
The details regarding an individual’s medical history are to be disclosed to the insurer, and the insurer should also know if the policyholder either smokes or consumes alcohol. Disclosing such facts are necessary because later the company cannot allege an individual of breaching the contract and reject your claim.
Hence, term insurances are essential and also affordable. An individual should check the policy papers after they get the coverage and most importantly inform his family about the policy and appoint a nominee. There are also various kinds of riders that can be added to the policy to make it stronger. One can also avail a tax benefit under Section 80C of the Income Tax Act 1961 where the policyholder is offered deductions on the premium paid, and the sum assured.