Term insurance was ideally introduced to cover your specific financial requirements. It is one of the insurances in the market that also offer death benefits. Taking a term plan has become an imperative element to start saving money for your specific financial needs. There are plenty of benefits you can avail from this plan. That’s the reason people prefer this insurance in large numbers.
Term insurance was started with a basic structure, but as its popularity grew, things started becoming challenging to understand. In this article, we are going to talk about things that you must consider before taking up a term plan.
#1 Calculate The Insurance Coverage
You must broadly assess how much you want to assure the insurance plan. Take note of your family needs and financial obligations that you need to meet. Here are few things that you can do to calculate the amount-:
- Monthly income of your family.
- Add the liabilities like loans and bills.
- Deduct the liquid assets
- Add expenses that may arise in the coming years
- Add your retirement corpus.
This calculation will help in determining the total amount you need.
#2 Ascertain Tenure of Your Plan
Once you have ascertained the total amount, the next step is to decide the tenure of your plan. It is essential to make sure that the tenure is not so short and not too long. You might seek help from the insurance company to understand the right tenure for the plan. The ideal way to decide the tenure is to ascertain when your liquid worth will be more than your insurance cover. The age when both the numbers will coincide will be an appropriate time for your insurance plan.
#3 Peace of Mind Per Rupee Premium
Another important factor you need to consider is the premium amount. After picking the plan, the next step should be to decide the combination of your premium. It is essential to understand that your premium amount must give you peace of mind, instead make your life even more challenging. That means you must be able to pay the premium without any difficulty. Buying premium online can give you more benefits regarding the premium.
#4 Pick Your Riders Wisely
Term insurance plans also come with add-ons which are also known as riders. It is important to understand the worth of the riders and then decide the right rider for you. Following are the common riders available with term insurance-:
- Accident Death Benefit: If you die before the policy maturity due to accident, the sum assured will be added with a death benefit paid to the nominee.
- Critical Illness: If you have any critical illnesses, a lump sum amount will be paid to the insured.
- Waiver of Premium: There is a rider which enables you to waive off the premium.
These are some of the basic aspects of a term insurance plan that you must take into consideration. Additionally, it is also essential to consider the claim settlement ratio of the company.
