Factors to consider while buying a term insurance plan
You don’t buy life insurance because you are going to die, but because those you love are going to live. ~ Unknown author.
A Term Plan is the purest form of life insurance that provides financial protection to your family members. It will help your family meet their financial needs arising due to household expenses and repayment of loans in your absence.
When you consider buying a term plan, you need to be fully aware about the benefits provided by a term insurance plan and the required sum assured. The life cover you choose, when deciding on the term insurance plan, should help your family to maintain their current lifestyle, and take care of all your liabilities like repayment of home loan, EMIs, credit card bills etc., while keeping in mind the decrease in value of money due to inflation.
A term plan is a life insurance plan that provides financial protection to the family members in case an unfortunate event of death occurs to the policyholder. The nominee will receive a lump sum amount, on the death of the policyholder. This lump sum amount can be used for meeting household expenses, repayment of loans, etc.
Listed below are the factors you should consider while buying a term insurance plan.
Your cover amount/Sum assured: It should accommodate all your family members and their lifestyle needs. It should also consider inflation and your liabilities like EMIs, loans, etc.
Payout option: Do you want to just replace your income or do you have loans which you would wish your family pays off first? If you only wish to replace your income you can choose a monthly payout option but if you have loans and you wish that your family pays off the debts first then a lumpsum amount will be beneficial. Some plans provide an option to choose a combination of both income and lumpsum.
The policy term: Since term plans only provide death benefit, it is recommended that you choose a policy term for a longer duration. A longer life cover will ensure that your family members are protected for a longer time and you can have peace of mind. In the case of term plan, if your policy term expires the benefit is lost. Hence, you should take a term plan which covers you at least till the age of 80.
Riders: You can choose riders for complete protection. Some riders that are available are Accidental Total and Permanent Disability rider, waiver of premium rider, accidental death benefit rider.
Premium: Premium amount is an important factor when it comes to choosing a term plan. Go for plans which provide higher sum assured at lower premium rates.
The above factors should be considered before you purchase a term plan. Life is uncertain, it’s better to be prepared and secured with a term plan rather than realizing it later when it’s too late!
Finally, it pays to remember that
Fun is like life insurance; the older you get, the more it costs. ~ Frank McKinney aka “Kin” Hubbard (1868-1930), American cartoonist, humorist and journalist.
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