Term plan is one of the simplest insurance products that is trusted by consumers when it comes to financially securing their family for the future. It is a protection plan that offers coverage for a fixed period in exchange for a regular premium. If the policyholder passes away during this fixed period, the insurer provides a pre-determined sum to the nominee.
Being affordable is one of the most significant features of a term plan. It does not have any investment component and only covers the life of the policyholder. A term plan provides adequate coverage at a budget-friendly rate that can help take care of your family’s financial needs when you are not around to earn a paycheck.
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9 Factors You Must Consider Before Buying a Term Plan
Although the term plan is quite easy to understand, it is essential for you to look for a few key factors before purchasing the policy. Here are 9 factors you must take into account when looking for the best term insurance in India:
- Coverage
Choosing the right coverage is the first factor you must consider while purchasing a term plan. This policy is designed to provide for your loved ones when you are not around. And this plan must cover all the basic expenditures as well as the major expenses such as kid’s education and loan liabilities incurred by your family.
Buying a term plan with an inadequate coverage amount defeats its own purpose. Therefore, you must ensure that the coverage amount is sufficient as per your family’s requirements.
- Inflation
The price of items may increase rapidly with inflation. It is a vital factor to consider while looking for the best term insurance in India. Therefore, make sure to factor in the inflation while estimating your sum insured requirement to secure your family’s financial future.
- Duration
It is advisable to buy a term plan that covers you till you keep working. You should avoid buying a plan with a short tenure. Also, availing of a term plan when you are old can be expensive, and you may get denied due to any health conditions. It is beneficial to buy the policy early in life with a long tenure. Therefore, choosing a term plan that gives you the flexibility to fix the tenure can be in your best interest.
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- Affordable Premiums
A term plan is a long-term policy, so ensure that the premium amount should fall under your budget. Buying a term plan with a premium amount that is over your budget will only prove to be a financial burden. It is crucial to keep this factor in mind when buying the best term insurance in India.
- Choose a Credible Insurer
With so many term plans offered by different insurance companies, it is vital to find the insurer that best fulfils your requirements. Make sure to check basic things such as claim settlement ratio, solvency ratio, market reputation, and financial background of the insurance company. These basic factors will help you determine the credibility of the insurer and help you find the best term insurance in India.
- Payout Options
The premiums of a term plan will also depend on the payout option you choose. You can either opt for a lumpsum payout option or a regular payout option as per the policy. Choosing regular payout options can be helpful if you feel that your family will not be able to handle a large lump sum amount.
- Claim Settlement Ratio
The claim settlement ratio refers to the ratio between the number of claims settled by the insurer and the number of claims filed. A claim settlement ratio of 50 would mean that the insurance company has paid 50 out of every 100 claims filed. The higher the claim settlement ratio, the better. It is advisable to buy a term plan from an insurer with the highest claim settlement ratio.
- Assigning a Nominee
You will be required to nominate a person who will receive the monetary compensation of the term plan. You should know how to change nominee because you may require to do so in the future.
To make sure that your family stays financially secure, you should opt for a term plan. And keep the above factors in mind while looking for the best term insurance plan in India. Max Life Insurance is a trusted brand that offers term plans at affordable premiums along with extensive benefits.