9 Things to Consider Before Buying a Term Plan

Required cover:

It is important you choose an adequate cover amount and avoid being over or under insured. A life insurance policy is meant to provide for your dependents when you are not around. Ideally, this plan must take care of the basic expenditure that your family will incur; major expenses like education/marriage of children and other liabilities like loans. If you avail a life insurance plan with inadequate sum assured, then the entire purpose of securing your family is defeated.

The inflation factor:

If you've bought a term plan of ₹ 50 lakhs and think your family's future is well secured, think again. In a matter of 10 years this amount will be as good as 20 odd lakhs considering the rate at which inflation is increasing. So factor in inflation when you work out the sum assured you need.

Policy duration:

Ideally, a term plan should cover you till you intend to work. Avoid selecting a short tenure as it will end in a short period, may be the time when life cover is required the most. Also, availing a fresh cover at this time will be expensive and you could get denied if you have a health condition. The best thing to do is to choose a plan that offers you the flexibility of fixing the tenure.

Online/offline plan:

Check your options for availing a term plan, online or offline.Now-a-days, most of the consumers are opting for  online term plan as they are comparatively economical to avail than the offline policies. Not only do they cost less but can be bought instantly at a click of a button as well without any medical tests (for a certain age group and up to a particular sum assured).

Features of the plan:

Check the features of the plans you like to match your requirement. The policy should be flexible enough to allow you to choose the tenure, the sum assured and the means by which you want to pay the premium annually or half yearly. Also, see if they can provide any additional benefits related to death benefit in the policy.

Claim settlement ratio:

The moment of truth for a consumer arrives when he claims his insurance. Here is when your family gets the benefit of the premiums you paid. Hence check the claim settlement ratio process along with the terms and conditions for the same.

Compare plans:

As there are many providers for term insurance policy in the market, it is important you compare the plans that appeal to you the most and decide which suits you the best. Apart from comparing the price also look into the features, benefits of the plan, and claim history.

Matching goals:

The plan you choose should match your financial goals. Some of them could be as follows

• To financially secure your loved ones by ensuring enough financial coverage to meet regular needs in case of an eventuality:
• Cover the loans you may have taken so your family is in not in a situation to struggle to repay them
• Protect the future needs of your children like their marriage and education

Premium affordability:

As term insurance is a long term product, you must be comfortable with the premium amount charged. So determine how much you can commit to the plan on an annual basis. Don't make commitments that could be difficult to fulfil later on as they will only prove to be a financial burden obstructing the many other responsibilities you need to complete.