Life is full of uncertain events which come all of a sudden. In such uncertainties, a
life insurance or Term Insurance plan can act as a cushion for your family's financial security. Such a plan will act as the income replacement for your family members.
However, when it comes to making the final decision of purchasing a term plan; Most of the people often confused about what amount of life cover to opt?
Which Insurer to choose? and what plans to buy? To help you make an informed decision. Here are a couple of tips on how to choose the
best Term Insurance Plan in India.
Determine the Cover amount by considering your Life Stage & Number of Family Members:
Your dependent family members may vary at different life stages. Financial responsibilities of a single person are not the same as that of a married one or one with children. The cover amount ought to be chosen according to the need. Bear in mind to look out for the future and plan for expanding financial responsibilities.
Consider the amount your family needs to maintain their lifestyle:
The extent of Health Insurance or Term Insurance Coverage largely depends on the current lifestyle of your family members. Assess the number of funds required to sustain your current lifestyle. Don’t forget to factor in inflation, and accordingly plan the life cover.
Coverage Amount Should be Determined Based on Family’s Needs & your income:
Whether you are the sole provider of the family or a contributing member to the collective income of the family. The cover amount is equivalent to the amount of income required to sustain the everyday bills for your family.
Add Any Liabilities You May Have to the Cover Amount
Many earning individuals are often under the burden of existing liabilities. These liabilities include such as personal loans, home loan, and car loan. To prevent the burden of EMI repayment from falling on your family. It is essential to include the amount repayable of outstanding loans in the life cover availed.
Higher Claim Settlement Ratio is Better
To live up to their promise of offering monetary reimbursement, Life Insurance Company should have an effective claims settlement process. Claim Settlement ratio is the numerical value representing the number of claims settled against those filed. Higher the claim settlement ratio, better are the chances of availing the entire sum assured amount. At Max Life, 96.95% of the total individual death claims were stagnant in FY'16 (Src: IRDAI Annual Report, 2015-16).
Know Which Riders will Maximize Your Coverage
Apart from the death benefit extended by a term plan, some plans offer additional coverage in the form of riders. Riders like disability cover, loss of employment cover, waiver of premium cover, can be added by paying a small amount of added premium. These riders add considerable value to the basic term plan purchased.
Start by creating a quick quote to understand the interplay of all these tips and choose the most suitable cover for your family's future. Happy Investing.
