Are you confused about the insurance plan? Check These Three Steps To Buying The Right Term Plan
In order to ensure absolute safety and security for your family, in the event that something untoward should happen to you, it is recommended that you take out a term insurance policy or a term plan as it provides you with a higher sum insured at lower prices. lower premiums compared to other insurance policies.
Here are three steps that will lead you to a term plan tailored to your needs.
Decide on the sum insured
In order to be able to decide on the sum insured, you must assess the needs of your family in case something bad happens to you.
Take into account your income, the number of dependents and the expenses necessary to maintain the current lifestyle of the family. Some of the main goals in life like buying a house, raising and marrying your child, and the medical requirements of the elderly should also be considered.
To finalize the exact amount of term insurance plan coverage, the policyholder should also consider current liabilities, existing investments, and inflation that increases over time.
âIn addition, the life coverage of the term life insurance plan is calculated on the value of human life which evaluates the amount according to the stage of life. For example, a person under 35 should buy blanket 25 times annual income, those aged 36-40 should buy blanket 20 times annual income, while those in the 41-45 age group years should buy coverage 15 times their annual income, âsays Naval Goel, founder and CEO of PolicyX.com, an insurance comparison portal.
A popular rule of thumb is to have life (sum insured) coverage of 10 to 15 times your annual salary.
You should never opt for a lower sum insured as this may not provide complete protection for your family. Life insurance providers usually have calculators on their website that will help you calculate your insurance needs.
Choose the policy period carefully
A term plan should cover you until family members are dependent on your income.
Ideally, a term plan should at least cover you until you reach retirement age. “If you have dependents who would need your support beyond your working years, for example children with special needs, you can also opt for coverage up to age 99”, explains Richit Ummat, digital and online sales manager, Bharati. AXA life insurance.
The younger you are, the longer the policy should be. âFor example, a 30-year-old should buy a policy for the next 50 years, while a 50-year-old should buy a policy for the next 35 years. In addition, the term of the policy can be finalized depending on the debts of an insured and his financial goals for the future â, explains Goel.
Select the right insurer
âOverall, the reliability of the brand, products and services that a customer is looking for plays an important role in choosing any insurance policy,â says Ummat. The company you buy the plan from should have a high claims settlement rate.
The time taken to resolve claims by the business should be less and the claims settlement process should be straightforward. The company must provide good digital policy service options to customers so that customer queries are resolved anytime, anywhere.