Buying a term insurance policy has become the need of the hour.
In a world of uncertainty, many people seek security. Early planning for a financial future is the first step individuals can take to prepare for all the surprises life throws at them. And if there is one thing that is certain in today’s society, it is that health and well-being are more important than ever before.
Individuals have to live with the stress of growth, productivity, and job stability, and that stress is being taken out on their families.
Therefore, investment plans must take our entire financial situation into account and develop strategies to optimise savings, considering all stages of life and all goals.
Life insurance has always been essential in India, but after the Covid-19 virus swept through the country, it became even more so.
What is a term insurance policy?
Like any other insurance policy, term insurance is essential to one’s financial protection.
Term life insurance is a pure life insurance policy that protects from the uncertainty of life and its risks and does not include any investment/savings component.
If an insured person dies during the life insurance policy term, their beneficiary can receive a lump sum payment. Term life insurance is not very expensive compared to other life insurance plans.
Individuals can buy term life insurance policy online or offline.
Seven significant things to examine before buying a term insurance policy
Purchasing a term insurance policy is vital for one’s financial protection.
However, before individuals buy term insurance in India, it is crucial to consider the following points. Below is a guide to buy term insurance.
Before individuals purchase a term insurance plan, they are advised to consider the amount of coverage required. It is essential to evaluate what the family will need to live the same lifestyle and meet their future expenses if something should happen to the individual.
Thus, to decide the insurance coverage required, individuals need to consider their age, the number of dependents, lifestyle, present expenses, present debts and investments, future goals, rate of inflation, etc.
After evaluating these points, individuals can decide on the required insurance coverage.
Tenure of policy
Once individuals have decided the amount of coverage they require, the next thing to consider is for how long they want the policy to last (i.e., policy’s tenure).
If individuals opt for a policy with short tenure, the policy might not last long enough or might lapse before their financial obligations are done.
However, if the policy tenure is too long, the premium will be too high because of the higher period.
Thus, individuals are advised to properly evaluate the tenure of their policy before buying a term insurance plan.
Research the insurer
When individuals buy online term insurance plans, it is advisable to choose a lender that offers individuals the best term insurance plan.
Reviewing different plans is a prudent approach to take. It is also wise to compare the benefits the insurer offers.
It is also necessary to look at the insurer’s reputation, claim settlement ratio, process, customer service, premium, and even the terms of each contract.
Paying for a term insurance policy is not a one time cost, but it is a long-term commitment that the insured must fulfill. Therefore, individuals are advised to have a plan that will work well for them.
When they choose the sum assured and premium, they have to consider their future financial stability because the cost of insurance may not be affordable in the years to come. They must find the balance between how much insurance their family needs and what they can afford for premiums every year.
To avoid lapsing on premium payments, it is better to choose the online payment method for premium payments. Online payments are more secure, and they make sure that premiums are paid on time.
Essentially, choosing this mode ensures that the customer will never lapse their policy and will not have to pay late fees.
A term insurance policy offers a variety of riders that can be purchased at a reasonable cost, apart from the death benefits.
Some of the riders are critical illness riders, accidental death benefit riders, waiver of premium on disability riders, waiver of premium on critical illness riders, etc.
Individuals need to research these additional benefits to find out if they meet the needs of their situation. These riders might differ for each insurance company, so it is crucial to read the fine print.
Claim settlement process
The claim settlement process is another factor that needs to be considered before buying a term insurance plan. The death of the breadwinner in a family can cause a lot of stress, both emotionally and financially.
Having a hassle-free claim process can ease some of the burdens by providing compensation to the survivors of the deceased.
In some cases, families have given up on their insurance claims because of the mess that can occur in the process.
Without an easy claim settlement process, life insurance would not be worth it because it would not serve its original purpose.
Individuals are also recommended to consider the tax benefits of a term insurance policy.
Individuals who buy a term insurance policy are eligible to use the amount paid in premiums as a deduction under Section 80C of the Income Tax Act up to Rs. 1.5 lakhs.
Moreover, the sum assured received by the nominee on the death of the insured will not be taxed u/s 10 (10D), subject to some conditions.
Finally, the premiums paid for a critical illness cover option can be availed as a deduction u/s 80D, subject to some limits.
Term life insurance policy is one of the essential financial products that every individual needs to have. There are many benefits and advantages of term life insurance.
Life insurance can essentially provide a safety net and take care of an individual’s financial responsibilities by paying off any debt they owe, paying their mortgage off, and providing a sizable sum to their spouse or children in the event of their death.
A term policy is one of the most popular ways of buying insurance coverage in India because it provides good coverage at affordable rates.
In addition, always read and comprehend the various features, benefits, terms and conditions, inclusions, exemptions, etc., to avoid any disappointment in the future.
Choosing a good plan to ensure individuals are well-covered and that the insurance meets their requirements is crucial.