Buying a term life insurance is always the right decision. It protects your family financially and gives you much-needed peace of mind.
But it is equally important to make sure you choose an insurance plan that suits your needs. Term insurance plans come in a lot of shapes and forms and choosing what is right for you could be confusing at times.
To help you with choosing, let’s take a look at five important things to remember when buying a term insurance policy.
- Make sure the policy suits your needs
Different people will have different reasons for buying a term life insurance. While the general consensus is protection of your family at a time of despair, you could have specific reasons to buy one. Analysing and understanding that is important in helping you choose.
For example, you just took a loan for that dream house of yours. You are concerned about how your family will repay the loan if something unfortunate happens to you. In this situation, you are taking the policy to protect your family against the debt. This analysis will make you able to choose a plan that will work the most in this scenario.
- Choosing the right cover amount
Once you have sorted out your specific reason for buying term insurance, you should choose a cover that is adequate. It is always advisable to choose the biggest cover amount you can afford. If your goal is the financial protection of your family and there are no debts involved, it’s generally suggested that your insurance amount should be at least four times your annual income.
At the same time, if you have debt, it’s better if your insured sum can cover both your debts and your family’s financial needs.
If we take the same example above, if the home loan amount is Rs.25 lakh, an ideal insured sum would cover this debt and even after that, there will be at least four times your annual income at your family’s disposal.
- Choosing the right tenue
Your tenue amount should reflect your reason for buying term insurance as well.
In the same example, if the tenure of the loan is ten years, you could take a high paying term insurance for these ten years to cover the debt as well. After the loan is closed, you could opt for a more affordable plan with lower coverage since there is no debt involved.
Also, if you are in your 20s, term insurance premiums will be lower and choosing a longer tenure can save you money.
For most insurers, term insurance age limit is 65 years old and it is a good idea to go for a longer period here as well.
You could also add riders that will give your life insurance a guaranteed extension without a second medical test if you are nearing the term insurance age limit.
- Choosing the appropriate riders
Riders are add-ons for your term life insurance that will give you additional benefits. Here are some of the most common riders –
- Guaranteed insurability rider – This rider guarantees you an extension to your term plan without a second medical test.
- Accidental death rider – This gives the beneficiary additional coverage in case of an accidental death.
- Waiver of premium rider – This term insurance rider can be used to waive off your premiums if you become physically disabled or critically ill during the term of insurance.
- Making sure your family knows about your term insurance
It is critical that your family knows about your policy and understands how to claim it if something unfortunate is to happen to you. A lot of people find talking about life insurance to their families uncomfortable. But making your family understand is important in making sure they get all the benefits of your insurance.
How to buy term insurance online?
It is easy to buy term insurance online these days. Go to an insurance provider’s website, register, and do the documentation. Most of the processes are hassle-free and paperless.
It’s also ideal if you do your research and compare different term insurance plans before buying, because term life insurance is a matter of protection of your family and leaving it to chance is not a choice.
If you don’t have a term plan yet, don’t wait too long. Research, compare term insurance plans and get insured soon!