When it comes to choosing the best term insurance plans, you should know that the life insurance industry offers a plethora of options to the individuals. Life insurance is a must as it can look after your family’s financial insecurities against any uncertainty. Anything can come knocking your family’s door without any warning; therefore, you need to be prepared.
However, before you get a term insurance policy, it is important to evaluate your requirements and follow specific processes that can help you choose the best plan for yourself.
If you are feeling overwhelmed, seeing so many options available, keep on reading as this ultimate guide will help you make an informed decision.
#1 Determine the number of family members as well as think about your life stage
First and foremost, you need to think about the family members who are dependent solely on you for their needs. This may vary at different life stages. Financial responsibilities of a married individual differ from an unmarried person, and it changes if you have kids or retired parents to look after. Therefore, you need to choose the cover amount accordingly. However, you need to keep an eye on the future and strategize for increasing financial responsibilities.
#2 Identify which term plan to choose
Your financial situation will change as you make progress in life. Therefore, you need to choose a term plan taking these requirements and situations in mind. There are basically four different types of term plans offered. They include:
- The monthly income plan offers sum assured benefits that are paid out in regular monthly instalments to the dependents to help them take care of the monthly recurring expenses
- The increasing term insurance offers sum assured amount that is increased by a pre-set percentage to tackle inflation that’s causing increasing costs. To take care of increasing costs, you need a high cover
- The decreasing term insurance plan is for those who have lesser dependents to look after. For example, during the early stages, you are marked by different responsibilities, which includes the responsibility of your spouse, children, loan repayments, etc. However, once your loan repayments are successfully completed, and your children can take care of themselves, it will lower your insurance coverage needs. This is an ideal term plan for such individuals
- The level term insurance is a regular term insurance plan where the premium amount remains fixed throughout the policy term
#3 Know which riders will maximize your coverage
The best term insurance plan is the one that has all the angles covered. Riders are one way to achieve this. A rider is an add-on to the primary term plan that offers benefits over the policy subject but under certain conditions. For example, if there is a critical illness rider, then he/she is entitled to receive the sum assured upon diagnosed with the same.
#4 Higher claim settlement ratio
The life insurance company should incorporate an effective claim(s) settlement process to live up to their promise of offering monetary reimbursement. The higher claim settlement ratio means, the higher are your chances of availing the entire sum assured amount.
Always go with a trusted provider to avail the best term insurance plan. It is your responsibility to check and understand the terms and conditions of the policy you choose. You should be aware of all the technical details of your term plan.