A term plan offers sufficient amount of lumpsum amount to your family in case of your untimely demise. The sum assured, which is received as reimbursement through the plan, helps meet the basic financial needs of your family members.
There are numerous such term plans available in the market; on the flipside, the abundance of term plan options makes it difficult for a regular person to choose the best plan that suits his/her requirements. To make this search easy and convenient for you, we have presented a step-wise approach below:
Step 1: Assess Your Needs
A term plan has to be sufficient for your family’s needs in your absence . Keeping this in mind, you have to assess the sources of income, number of dependants, existing debts and liabilities, and the expenses incurred to sustain their current lifestyle. Furthermore, if you are planning for your child’s education, marriage, or pension for your spouse, then the amount invested on periodic basis in these instruments also needs to be considered. Click here to calculate the amount of cover you need.
Step 2: Compare Quotes & Choose the Term Plan Variant That Works Best for You
There are three types of term plans, pure term plans, term plans with monthly income and term planns with increasing monthly income available in the market. The premium paid towards purchase of term plan will vary as per the sum assured subscribed, period of cover, type of plan availed, and your age. Therefore, to get the best deal on the policy, a thorough comparison of quotes is recommended.
Step 3: Check Claim Settlement Ratio of the Life Insurance Company
Although many people choose to seek extensive cover, they often overlook the possibility of the insurer not sanctioning the promised sum insured to your family members. This is why you should check the claim-settlement ratio, expressed in percentage, to know which insurer best settles claims and to what extent. At Max Life, 96.23% of the total claims were settled in 2015-16 (Src. Public Disclosure).
Step 4: Factor in Inflation
While age and duration of cover still continue to be the key factors considered when you purchase a term plan, don’t forget to account for the impact of inflation on lifestyle needs. To avoid inflation from biting a significant share into your sum assured amount, it is recommended to take professional help from a financial advisor while narrowing down on the sum assured and selecting the policy.
Step 5: Look for Riders
Riders help enhance the scope of protection extended by the term insurance plan. Several insurers offer the provision of attaching riders to the term plans, thereby increasing the level of protection. For instance, Max Life offers the Comprehensive Accident Benefit rider along with their term plans where the insured will receive additional protection benefit in case he suffers from partial or total disability due to an accident.
These are the five easy steps to choose the best term plan in 2016. Follow them and secure the future of your family financially today.