Building a financial safety net for your family is essential. This is why you should opt for term life insurance, particularly if your loved ones are dependent on your earnings. It enables a simpler and more reasonable option to secure your family in case something happens to you down the line. However, it is vital that you select the right policy. Here is a guide to the same.
1. Understand Your Needs
Knowing why you require term insurance is the first step to be taken towards comparing and choosing policies. You will naturally want to meet the costs of your children’s education in the future, along with repaying loans and supplementing the household income. You should first identify your future financial obligations and targets. It will enable working out the coverage amount and the suitable tenure that is sufficient for covering specific financial requirements.
2. Decide on the Right Coverage Amount
The coverage amount should be well considered. A safe coverage option is approximately 10-15 times the income you earn annually. Yet, this is not a universally applicable solution. You should review the debts you still have not paid, the family size, and upcoming financial commitments/goals. Use human life value and term insurance calculators to work out the right coverage amount, depending on your personal circumstances.
3. Compare Premiums Without Losing Benefits
Choosing the most affordable policy can be an option. However, the pricing should not be the only benchmark that you adhere to. Undertake a thorough policy comparison based on factors like the claim settlement ratio, available riders, benefits, etc. The claim settlement ratio is the indicator of how proficient the insurance company is in terms of settling policyholder claims.
When comparing, also look for added bonuses such as terminal illness cover included; accidental death benefit, or premium waiver options.These enhancements to the policy, referred to as riders too, can go a long way in giving you extra benefits than just simply chasing competitive premium costs.
4. Look for Flexibility
Life can be unpredictable, and you may have different needs later. There are term policies in India that provide flexibility in increasing coverage in the future or converting the term plan into a whole life policy. Pick a policy that can be flexible as your life changes, so you don’t have to apply for new life insurance coverage later at higher costs.
5. Understand the Policy Terms
Lastly, read the policy benefits and drawbacks in their entirety before signing on the dotted line. What are the exclusions? How long is the grace period for unpaid premiums? It is important to find out what will be covered in your policy to avoid surprises later on in your life.
Conclusion
Your quest to find affordable premium rates should not be the only point of concern while purchasing a term life insurance plan. Ensure that the family has suitable and sufficient coverage that will help them tide over emergency situations. Take some time to understand your specific requirements, compare multiple policies, and finally select a reliable insurance company.