Life is uncertain and one should be prepared to face the uncertainties by making proper arrangements. To ensure your family stays financially secured, you need to have a term life insurance. You must have heard the word term insurance at some point, ever wondered what does it mean? Term insurance is the insurance plan that provides coverage for a specific period. If the insured person dies during the tenure, the sum assured is paid to the family of the deceased. The main aim of taking life insurance is to provide life cover to the insured person and financial security to his family in case of any unforeseen situation like death. The term insurance cover is purely life cover plan with no savings or profit factors.
When you are planning to buy a term life insurance, make sure you take into consideration a few factors to avoid regretting later. Read further to know the five points to consider while buying term insurance.
- Decide the cover amount – Various factors need to be considered while deciding the cover amount. These factors include the insurer’s age, financial responsibility, current liabilities, basic expenses, future financial needs, etc. Basically, the younger the age, the higher should be your cover amount.
- Decide policy period – Buying life insurance at an early age makes a wise decision as there is less risk involved and so the insurance companies offer more coverage at lower premium rates. If you are buying term insurance in your 50’s, then a policy period of 10 to 15 years is advisable. If you are planning for retirement, then plan for the policy period that stretches up to your age of retirement. Consider your financial responsibilities like any significant loan amount if you have taken any while deciding the policy period. For example, if you have taken a home loan for 25 years, make sure your policy period is up to 25 years to ensure the financial security of your family.
- Discuss payout options – There are two options of paying out the premium amount. The first one is paying a lump sum amount, and other is lump sum amount payout with regular monthly income. You can receive regular monthly income for life cover over ten years.
- Compare the available options – There is no doubt that the term insurance plan makes a comprehensive financial security plan. It has reasonable premiums and offers peace of mind. Although, with so many options available in the market, choosing the best suitable term, insurance can be a task. Make sure you research thoroughly about the options available and compare the offerings before deciding.
- Choose a suitable insurer – There are various term insurance plans offered by different insurance companies. You must know your requirements well before deciding which plan to buy. While deciding, do basic check about the insurer. Also check their claim settlement ratio, solvency ratio, market reputation and financial background.
The fundamental step of buying a term insurance plan is to know your requirements well. Visit websites of insurance companies providing term insurance and calculate premiums on online calculators. If the premium amount fits in your budget, find out the documents needed to buy the term insurance plan from that insurance company and keep them handy to apply.