How Term Life Insurance Plan Top 5 Term Insurance Plans
How Term Life Insurance Plan Top 5 Term Insurance Plans
Term insurance plans were introduced with a very basic structure the plan will offer a death cover will cover you for up to 65 years and premiums can be paid in only the annual mode then as more insurers started offering online term insurance
plans
things started to become a little complex today there is limited pay plans
increasing cover plans staggered payout plans return of premium plans and
dozens of combinations while this profusion of choices is good news
it is also becoming a problem as most Millennial
are unable to decide on which policy to buy in this article we'll separate the
wheat from the shaft and identify the most important variables you need to
consider when buying a term insurance plan
Number 1: identify your needs and the term insurance coverage you
seek your term insurance coverage should broadly assess how much financial
resources your dependents will need to have to provide for themselves if you
were to meet and untimely death and the best way to get started on this is to
grab a piece
of paper and do the following one estimate
your dependent family's monthly expenses and multiply it 150 times this
multiple of 150 factors future inflation and is a good way to start the process
to add your liabilities on account of home loans credit card bills personal
loans etc 3 deduct any liquid assets that you already have like fixed deposits
stocks and mutual funds fourth add your expenses planned on account of
important life goals that are likely to happen in the next 15 odd years like
your children's higher
studies or the marriage etc and point 5
finally add the retirement corpus you want to leave for your spouse on his or
her retirement the total of all these will help you arrive at how much of term
insurance cover one should be endeavoring for if you want to know how to
calculate your term insurance requirements in greater details do check out a
comprehensive article on the subject which I have linked in the description
below
Number 2: determine the tenure of your plan once you know how much
cover you need it's important to determine till what age you need the cover for
you don't want the tenure to be too little as your policy might lapse before
you are done with your financial obligations you also don't want the tenure to
be too high because the premium
charge from you will be high on account of the
higher tenure a very good and scientific way of estimating the right tenure for
your term insurance plan is to determine by what year will your liquid net
worth that is the total investments that you have in mutual funds provident
fund and stocks etc after subtracting your liabilities will be more than the
life insurance requirement we have calculated earlier the age at which these
two numbers coincide will be the age until which you need coverage because for
start your assets will take care of your dependents upon your demise
Number 3:
target to achieve the highest peace
of mind per rupee of premium paid the premium is one of the most important
factors that needs to be considered your goal should be to get the highest
peace of mind per rupee of premium the reason I use peace of mind rather than
coverage per rupee of premium is because consumers
often value some key intangibles in
decision-making this can be things like stability of the insurance provider or
its reputation in the eyes of the policyholder since term insurance is a
long-term contract often running into 30 40 or 50 years it is important for you
to be happy with your decision of insurance provider which will
be a combination of premium and your
perception of the insurer a useful tip here for most insurance companies term
insurance policies that are sold online on platforms like ETMONEY are cheaper
than policies sold off line in branches or our agents so it makes more sense to
purchase term insurance plans online as it gives you a clear premium advantage
Number 4:
choose your add-ons wisely term insurance plans offer riders at reasonable
costs which should certainly be considered by you even if it might not fit in
your requirements there are four major riders that are available which are one
additional cover for depth due to accident for an amount in addition to your
basic depth cover
shall be paid if you were to die in an
accident to critical illness cover where a lump sum amount is paid on the
diagnosis of one of the listed critical illnesses with the life insurer three
waiver of premium on disability where future premiums are waived off if the
policyholder is rendered permanently disabled and four waiver of premium upon
critical illness where future premiums are waived off on diagnosis of a listed
critical illness
off the four riders the two waiver of premium
riders come at low premiums while the critical illness rider is generally the
most expensive one you have to run some permutations and combinations to see if
the additional benefit match up for the premium charged and don't forget to
read the fine print of all these add-ons which tend to be different for the and
insurance companies
Number 5:
broadly look at the claim settlement ratio claim settlement ratio attracts a
lot of consumer attention as it indicates the efficiency at which the policies
are being settled so when you see a number of 95 percent in the claim
settlement ratio
column it means 95 out of hundred claims
reported to the insurance company were settled a word of caution here the claim
settlement ratio is merely an indication and if this ratio is over 95 percent
then the company has been very efficient about settling claims you really don't
need to go much deeper into it as to see who has 99 percent ratio or who has
98.5 percent ratio
it is advisable to use the claim settlement ratio as a filter rather than a key decision making criteria term insurance are long-term contracts which benefit your dependents and it is in your interest to identify the right plans for your family
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