On the road to financial safety and stability, buying a term insurance plan can be a crucial step. It is one of the most straightforward forms of insurance products available today. Moreover, considering the growing need for financial security in the aftermath of the pandemic, it has become even more critical to have an emergency fund.
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Having a firmly established safety net in such a situation can protect your loved ones from the financial strains caused in difficult times. There is no shortage of choices in the current scenario when it comes to a term insurance plan. Insurance providers offer policies with multiple benefits to suit the diversity of financial profiles.
Although many may understand the value of insurance in life, it can be challenging to find the right policy among so many options in the market. So, to make the purchase process more convenient for you, here is a list of term insurance plan must-haves that can help you narrow down your options:
- Affordable Premium Rates
Term insurance plans are considered one of the most affordable options for securing your family. You can remain financially covered for an extended period by paying minimal premiums to the insurance provider, per your financial profile. So, when you are on the lookout for the best term insurance plan, make sure to find one that suits your budget.
The premium rates for a term insurance plan may also across different insurance providers, depending on the policy specifications as well. Additionally, you may also get the facility to choose from different premium payment options such as regular pay, limited pay, etc.
If you wish to be done with your premium liabilities within the first few policy years, you can choose the limited premium payment option for term insurance offered by the insurer. Additionally, you can also customize the plan by selecting monthly, quarterly, half-yearly or annual premium payment frequencies. The flexibility of term insurance enables you to align the policy with your financial standing appropriately.
- Suitable Policy Tenure
Choosing a suitable policy tenure for a term insurance plan is crucial. It determines your affordability for the plan in terms of sum assured and premium payments. However, you have to understand what is term insurance plan and the role it plays in your financial portfolio before you can determine a suitable policy tenure.
Term insurance is essentially a long-term financial instrument that can provide life cover for an extended period. In some cases, insurance providers may also offer whole life coverage with a term insurance plan, meaning cover for up to 99 years of age. As per your life stage, at the time of buying the term insurance plan and other relevant factors, you can choose a suitable policy tenure.
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- Sufficient Cover Amount
As an earning member of the family, you have to ensure the well-being of your dependents. This means considering their future life goals when looking for the best term insurance plan. Since the term insurance plan is supposed to provide them with a financial shield, it makes sense to opt for a coverage amount, considering their particular needs.
In order to do this, you must carefully evaluate your net income after deducting taxes and regular expenses. After this, you can look at your saving patterns to understand your ability to pay for the term insurance plan. Most importantly, do not forget to consider outstanding debt repayments if you have any loans such as car loan, home loan, education loan, etc.
In case your spouse is dependent on your income entirely, make sure to choose a cover amount that is sufficient to cover their living expenses after you. You can use an insurance calculator to estimate this amount based on your age, income range, lifestyle habits, etc. Using that, you can see pricing variations for a term insurance plan among different providers as well.
- Relevant Riders Attached
Riders are add-ons that can be attached to your base term insurance plan, depending on their availability. By paying an additional premium for the rider, you can create a comprehensive security plan for your family against unforeseeable circumstances. Each term insurance plan may not offer the same riders.
However, you can generally find riders with a critical illness benefit, providing coverage for a list of life-threatening illnesses. A total of 4.31 lakh new health insurance riders were issued with insurance plans, per the 2019-20 annual report by IRDAI. Since the medical expenses are rising at an alarming rate, this can be a valuable rider to your plan.
Along with the critical illness rider, you may also a find waiver of premium rider, which allows you to remain financially covered under the term insurance plan without paying premiums in case of an accident leading to disability and income loss. Among other options, there are return of premium riders, accidental death & disability rider, etc. Make sure you choose the right ones that can enhance the financial security of your family.