Given the uncertainty of life, don’t you want to ensure your family’s financial well-being in your absence? The best way to achieve this is with life insurance policies. These policies pay the policy benefits to your nominees in case of an unfortunate event.
The simplest and most affordable way to provide financial security to your family when you are not with them is by investing in a term insurance plan. It is a pure life plan that pays the death benefits to your nominees if an unforeseen incident occurs during the policy duration. Most term plans do not give any survival or maturity benefits.
Several insurers offer term plans, and it is important to do your research before buying a policy. Firstly, you need to understand the term plan meaning, and then consider these five factors to make an informed decision:
- Determine a sufficient sum assured (SA)
While choosing adequate insurance coverage, you need to consider many factors. You must not opt for a random amount or be swayed by advertisements. Consider your current regular household expenses, debts and other liabilities, and assets. Next, you calculate the future financial requirements for long-term goals like children’s education, spouse’s retirement, and increase in expenses due to inflation. The SA should be enough to cover all their future monetary needs in your absence. You can use a term plan calculator to help find out the ideal SA.
- Do not withhold relevant information
Different factors, such as age, health condition, income, SA, lifestyle, and pre-existing conditions influence the premium payable for the term insurance policy. Therefore, while filling out the application form, do not hide any important details related to a pre-existing condition or lifestyle-related habits like smoking or drinking. In such instances, the premium is higher, and you can use an online term plan calculator to determine the increase. If you do not share such information, the insurer may reject your nominees’ claim based on non-disclosure. Keep this in mind, especially if you are buying through agents, as they may suggest not disclosing such information to ensure your application is approved without any issues.
- Include nominees’ details
Often, you may overlook the information related to the nominees at the time of buying a term insurance policy. However, it is crucial to provide these details to ensure that they get the policy benefits in their time of need. Give some thought to your nominees, as they will receive the policy benefits in your absence. If you are unmarried, you can nominate your parents who can receive the amount if something tragic leads to your absence. Nominate your spouse and children if you are married. This ensures that they can sustain their lifestyle and meet their life goals when you are not there to provide for them.
- Choose an optimal policy tenure
Select an optimal tenure that ensures the coverage continues till the time you achieve all your financial objectives. On the other hand, do not opt for an unreasonably longer tenure, as it increases the premium. One way to determine the tenure is by calculating the time when your total assets after deducting your liabilities exceed the insurance cover. After this time, your assets can take care of your family’s aspirations, and you will not require term insurance coverage.
- Opt for the necessary riders
Insurers offer additional coverage through riders, such as waiver of premium, accidental disability, and critical illness. They added these covers to your basic term policy at an extra premium. Consider your family’s requirements and include riders that are required for maximum coverage. More importantly, read the policy document carefully to understand the inclusions and exclusions for such riders.
When you buy term plan online, your family is financially protected when you are not there. Therefore, it is in their best interests to consider these factors and invest in the most appropriate policy.