Did you know that India’s life insurance industry is the biggest in the world, with 360 million active policies as of April 2017? This sector is expected to quadruple in size by 2027, as per a Sectoral Report released by India Brand Equity Foundation (IBEF).
If you are planning to buy a term plan to provision for the uncertainties of the future, do consider the following important points.
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Tips to Buy the Best Term Insurance Plan
- Arriving at a Sum Assured – The ‘sum assured’ is the guaranteed amount that you will receive from your insurance provider. While arriving at an appropriate sum assured amount do take into account things like your current salary, the kind of profession that you are in and the growth expected in your salary, rising inflation and future needs, such as if you are a parent, you might want to think about your child’s higher education needs.
- Ease of Buying – Most insurers will provide you with the option of buying a term plan online. It is a good way of speeding up the process, absorbing all the risks without getting influenced by a persuasive insurance agent, and at the same time,making a comparison between different policies to know which one serves your needs the best.
- Rising Premiums – While most policies will have a fixed premium amount, the risk of an increased premium,or what is known as loading, in the future or even cancellation of the policy cannot be ignored. This can happen in situations where, for example, you have started smoking and have not disclosed this lifestyle change to the insurer.
- Support from the Family– Do you have any other earning member in your family? It helps to know the depth to which you will be sharing the financial burden of your family on your own.
- Assess your Liabilities – Your existing and future liabilities must be taken into consideration before taking up a term insurance plan. You wouldn’t want to encounter a situation where even upon receiving the sum assured, your family still struggles to take care of your debts.
- Different Riders to Consider – Ever wondered if you need accidental death coverage to provide a financial cushion to your family in the wake of your untimely death? There are other riders that you might want to consider with your term insurance and these include waiver of premium, income benefit, critical illness and permanent/partial disability.
- Opting for the Right Insurer – As per the IBEF report cited above, there are a total of 53 insurance companies in India as of April 2017, out of which 24 deal in life insurance products. With so many different companies to choose from, you must look for an insurer with a good claims settlement ratio.
- Flexibility to Choose Payouts – Most term plans offer you the flexibility to decide how you will start receiving the payouts, i.e., whether in lumpsum or through multiple payments spread over a period of time.
There is no denying the fact that investing in a term plan is a great idea. By taking into account these tips you can arrive at the right decision on the kind of policy that will serve your best interest in the future.