Life’s uncertainty has always been a universal truth. However, recent incidents of young celebrities’ death may have just proved that calculating your years of life is impossible.
You may be in good health right now, but you cannot guarantee the future. Breadwinners in the family have always been worried about the upkeep of their family. Especially if they die too soon, this has led to the development of term life insurance.
Term Life Insurance
Term life insurance is designed to cover the life of the primary breadwinner, aka the insured person. It is one of the oldest, simplest and most basic forms of insurance.
Terms of Term Life Insurance
It entails a term or tenure for which the cover is valid. Nominees are typically dependent family members of the insured person. The other significant aspect is the sum assured. The sum assured is the amount that the nominees of the insured person receive, and they would receive the sum assured if the policyholder dies within the term of the insurance policy.
Online Comparison
The insurance market is teeming with insurers, and almost all insurers offer a term life insurance plan. However, comparing the pros and cons of each plan can be daunting, especially if you do it offline. In contrast, online comparison can prove to be much more effective.
Let us look at the aspects of term life insurance that you can compare online.
Premium Payment Options
Premiums of term life insurance plans are affordable. However, it would help if you examined the payment modes and options offered by the insurers. Moreover, you can choose between various tenures:
- Limited Pay: In the limited pay tenure option, you pay premiums for a term less than the policy term.
- Single Pay: Here, you pay a one-time premium, which is higher than other options.
- Regular Pay: Here, you pay the premium throughout the term of the policy.
You also have options to pay premiums either annually, quarterly or monthly. Choose the options best suited to your current financial condition and disposition.
Premium Amount and Sum Assured
A sum assured of one crore rupees is generally considered appropriate for an average household. However, it is an estimate. The needs of every family are different, and hence you should pick a sum assured which is appropriate for your family.
A popular rule of thumb while calculating the sum assured is 15 times your annual expenses.
Another way is to add the estimated costs of all of your families’ future goals. Add all your current liabilities like personal, home, or automobile loans. Then, deduct from this amount the value of all your current assets like fixed deposits, mutual funds, stocks etc. This will get you a decent estimate of your appropriate sum assured.
Premiums and sum assured go hand in hand. The higher the sum assured, the higher will be the premium. So pick a policy that has the lowest premium for your sum assured. All other things are equal.
1. Appropriate Riders for Complete Coverage
Term life insurance comes with a set of riders that you may opt for. The riders include critical illness cover, waiver of premium, permanent disability cover, accidental death cover etc. At an additional extra premium, you may opt for the riders that you are interested in. Adding riders makes your cover more comprehensive.
Go with the insurer who provides the most cost-effective package of policy and riders.
2. Policy Duration
Pick the policy which offers maximum duration, i.e. term or tenure.
3. Claim Settlement Ratio
The claim settlement ratio is the ratio of the claims settled to the claim made. It is a good measure of the insurer’s credibility. All other things being equal, go for the insurer with the highest claim settlement ratio.
4. Purchasing Term Life Insurance is a Breeze
Earlier, purchasing term life insurance was a long process. First, you had to fill out lengthy forms. Then, after that, you would have to wait for the insurer to approve your policy.
These days, you can buy term life insurance easily online. Fill out your basic information online, and your policy is generated pronto.
Use the tips mentioned above to compare term life insurance policies online. These will help you pick the policy most appropriate for you.
Read more about Types of Term Insurance Plans in India
OneAssure is a distribution platform that helps you make the right decisions on matters where health and finances converge. Visit oneassure.in to know more about your health insurance choices.