Term Policy: How to Find the Best Term Life Insurance

The time we start earning our family, especially our father, starts suggesting that you should save money for rainy days. Presently, many speakers and finance experts talk about financial planning and offer their advice through different social media platforms like Instagram, YouTube, Facebook, etc.

Whenever this kind of discussion begins, the importance of life insurance has always been a part of such a conversation. You have seen a lot of people telling you to make the right life insurance plan- go for term insurance if you have financial dependents and how easy it is to buy insurance online and get tax benefits under section 80C of the Income Tax Act.

While the above facts are true and you should consider them, first of all, you need to understand the basics of the term policy.

What is Term Policy?

A term insurance policy is basically a life insurance plan that an individual can take on his or her own life. This is a kind of insurance that provides a person with a life cover for a defined period. Under the policy, one has to choose a specific tenure and sum amount.

If the life insured dies during the term of the plan, a pre-decided amount is paid by the insurance company to the person’s family. The main purpose of the term insurance is to provide financial security to your family and loved ones against the loss of income after the death of the earning person.

Why Should You Buy a Term Insurance Plan?

Term insurance is mandatory for everyone who wants to protect his or her family from any financial crisis after his or her death. This kind of policy ensures a high coverage return at a low price. No other investment plan guarantees for financial security term insurance does and this is the reason why term insurance is a must-buy for everyone.

While the benefits of term insurance are a lot, there are some ways by which policyholders can maximize their coverage to avail optimum coverage at low rates.

How to Choose the Best Term Policy

1. The Sum Assured

As a rule of thumb, your age plays the key role here- the younger your age, the greater your policy sum assured needs to be. Suppose, you are in the age bracket of 25 to 30, your cover should be about 15 times your annual income, if you are in the age bracket of 45 to 55, your cover should be about 10 times your annual income.

2. The Policy Duration

Finding the right term plan with the right policy duration depends on various factors. 1. Your age (the younger you are, the longer your policy term would be), 2. Your retirement age, 3. Your current income, 4. Financial responsibilities 5. Major expenses

Type of Policy

Term insurance policies come in multiple variants:

1. Level Term Plans: The premium remains constant throughout the duration of your policy and so does the sum assured.

2. Increasing Term Plans: The sum assured raises time-to-time. It can be the right choice for those who expect their responsibilities may increase in the future.

3. Return of Premium Plan: Premiums are returned upon maturity under it. It is suitable for everyone as it comes up with a saving component.

4. Decreasing Term Plans: The sum assured goes down with time. It suits those who expect their liabilities to decrease in the coming days.

Payment Frequency

Another important point for consideration is premium payment frequency. Presently, the term plan allows you to make the payment on a monthly, quarterly, or yearly basis depending upon your convenience. Besides, you can also give standing instruction to your bank for periodic dedication from your account. There are also plans that let you pay a one-time premium. What you need depends upon your cash flow and nature work, so check and choose the plan accordingly.

Check the Add-ons

Term life insurance plans offer riders at a very reasonable price that you must consider enhancing your coverage. E.g. If you are frequently exposed to occupational hazards, the Accidental Death Benefit Rider can be helpful for you. Here are some popular riders that you can go for:

● Accidental Death Benefit Rider

● Accidental death and disablement benefit rider

● Critical illness rider

● Term Rider

● Premium Waiver Rider

● Terminal Illness Rider