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Here's How You Can Find The Best Term Insurance Plan

A good term plan will also let you choose when and how you want to receive the death benefit payout - whether that is in lump-sum, lump-sum plus monthly or monthly payouts.

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A term insurance plan is a life insurance product that offers the policyholder/insured, life cover at affordable rates. As it is the simplest and most basic form of life insurance, a term insurance gives high coverage at low premium rates. The main aim of a term policy is to provide the family members/beneficiaries of the policyholder/insured a monetary benefit (called a death benefit) on his/her unfortunate demise. Along with the life cover, a term policy offers other advantages that give additional protection to the policyholder and his/her family members.

Knowing what a term insurance plan offers, is often the first step in finding the best term plan. However, there are a few other pointers you should keep in mind to find the best term insurance plan:

Determine the amount of coverage you will need.

The amount of coverage you will need under a term plan will depend on several factors.

These include family-related factors, such as:

  • The number of dependents (family members) you have/ will have in the future including:

o Parents

o Spouse

o Children

o Siblings

  • Lifestyle needs including rent, utilities, and other costs
  • Personal goals such as higher education, a child’s marriage, or a family vacation
  • Loans such as a car/bike loan or a property loan
  • Medical needs of the family

Personal factors, such as:

  • Your age
  • Your current income/earnings
  • Your retirement needs
  • Your loans, liabilities, and debts
  • Your financial capacity to pay the premiums

Other factors, such as:

  • The present and future inflation rate
  • The premium rate
  • The term of the policy

Once you factor in these elements, you can get a clear idea of the amount of financial payout you will need from your term plan. Following the general thumb rule of getting a coverage that is 8-10 times your annual income will also help to figure this amount.

Look for a term policy with flexible features.

The best term insurance plan is one that is flexible and gives you complete control to customize your plan according to your needs. For instance, an accommodating term plan will let you choose between making monthly, quarterly, yearly payments or a one-time lump-sum payment. So, if you are a salaried individual, making periodic premium payments, would work well for you. Or, if you are someone who runs a business or practices their own profession with irregular cash flows, making a one-time payment might suit you better.

A good term plan will also let you choose when and how you want to receive the death benefit payout - whether that is in lump-sum, lump-sum plus monthly or monthly payouts. Also, a term plan should give you enough options to increase or top-up the amount of coverage under it as and when further needs crop up.

Ensure that the term policy offers additional riders.

One of the features that give term plans the title of ‘best term insurance plan in India’ is the quantity and quality of extra riders it provides to its policyholders. Ideally, a term plan with necessary riders also supports you through unforeseen events, such as accidents and life-threatening diseases.

Apart from giving you opportunities for making top-up additions, it should also accommodate your well-being and ensure that it waives off the burden of paying premiums when you are not in the condition to do so.

Buy the right term plan as early as possible.

Some of the best term insurance plans in India are offered to a policyholder when he/she is at their youngest. This is because the younger an insured is, the lesser is the probability of him/her making an insurance claim or bailing out of premium payments. So, a wide variety of features and benefits, along with offers and discounts, are offered to younger insurance holders.

Moreover, the advantage of low and affordable premium rates is also available to them, and the extent of coverage provided is large. Also, term insurance premiums go up every year. Therefore, it is wise to buy a term policy as early as possible to make use of the early-age benefit and lower premium prices.

To get a clear idea of the rates applicable to your age, you can use a term insurance calculator.

Check the insurer’s claim settlement ratio and performance.

How do you know if the best term plan lives up to its claim? You check the claim settlement ratio of the insurance company you are buying term insurance from. The claim settlement ratio is the number of insurance claims accepted by an insurance company in a year. This ratio also gives you an idea of the percentage of claims rejected in a year. The rule of thumb is that the higher this ratio is, the better and more reliable the company in question is.

You can also check the insurer’s turnaround time, the quality of their customer services, the testimonials of previous/current policyholders, and any other factors that can give insight into their trustworthiness. This trust is vital as buying a term plan from an insurance company will set-off a long-term relationship between you and the company.

To sum it up:

A lot of factors come into play to find the right term insurance plan for you. An effective way to find one is to compare the different term plans offered by insurers and use a term insurance calculator to get a clear idea of your needs.