A life cover is important and given the phase through which humanity around the globe is passing presently, life insurance has become even more crucial.However choosing a perfect life insurance policy could get tricky sometimes as people get confused as there are a lot of life insurance companies offering life cover with varying benefits. While choosing the best term insurance plan, you are also faced with the option to go for traditional term plan or opt for online term plan. Some of the renowned term insurance plans are LIC Term Plan HDFC Term Insurance, ICICI Term Plan, SBI Term Insurance etc.
Lets understand in details How to Choose the Best Term Insurance Plan in 5 Steps:
Amount of Insurance Cover
This is the major point to look for while seeking out a term insurance plan. The amount of insurance cover is basically the amount the policyholders's family would get in case if the policyholder passes away. It is important that you do an in-depth financial analysis by taking into account - family’s monthly expenses, current liabilities, future inflation, and expense required to maintain current lifestyle. This is an activity which helps you to arrive at an estimate amount of your term cover.
Tenure of Your Term Plan
The next criteria to select the best term insurance plan is choosing an accurate duration of the plan. This becomes easy when you have done your financial analysis and are aware of the cover you will need. The best way to determine the tenure of your insurance cover is to find out the year when your liquid net worth will be more than your term life insurance cover. The important thing here is to understand that the tenure should not be too short as the policy might lapse before your financial goals are achieved, at the same time it should not be too long as you will not need it after your financial goals are achieved.
Claim Settlement Ratio
When it comes to choosing the best term insurance plan, it becomes equally important to choose the best life insurance company, as they won't back out on payouts. It would be a waste investment, if you did not get the sum assured on the date of policy maturity. Claim settlement is more of an after sale service and the insurance companies that have higher claim settlement ratio, earn the title of the best life insurance companies. Just do your research and check for the life insurers claim settlement ratio to filter your options.
"Riders" is a technical insurance industry term which basically means add ons to your basic term insurance plan. There are a number of riders available to choose from in addition to your basic plan, such as - death due to accident rider, critical illness rider, waiver of premium on disability and premium on critical illness. However these additional covers may cause a hike in your premium.
Understand the Policy
Understand the finer points of your policies or take the help of your insurance agent to do so. Make sure you are well versed with every tiny detail or technicalities of the policy. Understand every feature such as Partial withdrawal, Loan against insurance policy, Policy nominations etc, so that your policy documents are accurately created and you are aware of your transaction.