Term Insurance is a type of insurance policy that covers the financial settlement of the family of an insured individual in case he/she is dead or not around anymore. Term insurance makes pay off the family all at once or as per settlement installment. Term insurance works for a specific period.
What can one cover under Term Insurance?
- Full amount in the instance of Death
- Full coverage in case of a life-threatening illness
- Semi coverage in case of disability
- Semi coverage in the instance of accidental death
There are 6 major factors you need to consider before choosing a term insurance plan:-
- The main aim is to offer security to your family members in case something unfortunate is to happen to you. You can choose a plan that assures a big sum of money to your family if you are looking for an indistinctive insurance plan. The sum offered to your family should at least be 15 to 20 times larger than your current annual income.
- As the treatment for critical or terminal diseases can be very expensive, it is important to get a critical insurance rider on your term plan as an add on. Also health insurance plans generally do not offer any compensation if you are diagnosed with such major illness.
- There are many advantages of buying your health insurance plan online. For starters, you will be required to pay fewer premiums for online term insurance plans as compared to the offline term insurance plans. Also the online term insurance plans may offer some discounts and you will be able to take your pick from a huge variety of plans. There is no involvement of agents and the process is swift and easy as no paperwork is needed.
- It is necessary to choose an appropriate tenure to get maximum benefits from your term insurance plan. The ideal tenure considered for your term insurance plan is generally 60 years of age which is the age of your retirement.
- Liabilities such as home loans, children’s education should also be taken into consideration. Your cover amount should include the outstanding loans and your family would be relieved from the financial obligations in the event of your absence.
- You should always buy your term insurance plan from a trusted and authentic insurance company. Many companies do not settle the claim on time. It is better to avoid such companies by checking the claim settlement ratio. An insurance company with a higher claim settlement ratio should be chosen as they are unlikely to make any delay while settling the claim.
Further, you can also check the solvency ratio of the company by which you can assure whether your insurer is financially able to settle your claim. Ideally, the solvency ratio should at least be 1.5 as made compulsory by IRDAI.