Factors to consider while buying Term Life Insurance.
Published on April 18, 2022 | Term Life Insurance
The outbreak of the COVID-19 pandemic turned everybody’s life upside down. As we faced infinite hurdles, we understood just how unpredictable life can be. The reality of the increasing death rate encouraged us to buy term life insurance. Better to be safe than sorry!
Term life insurance offers life coverage up to a certain period of time, i.e. the ‘term’. In case, the policyholder dies during the active years of the policy, then the family of the deceased receives a pre-decided monetary benefit from the insurance provider. In case the policyholder does not pass away, the policyholder gets an agreed sum of money on the maturity of the policy
Coverage: The most common mistake we make is, calculating the required amount of coverage. You must consider the aspects such as age, average monthly expenses, current loans, and lifestyle. Experts recommend buying a policy with a death benefit of at least 7-10 times your annual gross income.
Policy Period: The next important point to consider is the policy period. When you purchase a policy, choose the maximum available policy period. Opt for a term insurance plan at an early age if you want higher insurance coverage at a low premium.
Right Insurer: It is important to consider the following parameters before choosing an insurance provider:
Claim-settlement Ratio: It is the ratio of the number of claims settled by an insurance company and the number of claims filed by the policyholders. It is advisable to go for the insurance company with the highest claim-settlement ratio(CSR)
Solvency Ratio: It highlights the insurer’s ability to pay out policyholder claims.
Provide accurate information: Many companies reject claims on account of discrepancies filled in the form. Fill correct details, especially:
Date of Birth
Medical History(If you are a regular drinker, smoker, or may be suffering from an acute disease, do not hide these details from your insurer)
Family Medical History
Any other insurance policy you hold.
Choosing Ad-on: Choosing suitable riders is an added benefit that provides additional coverage in the term insurance plan.
Critical Illness cover: On being diagnosed with critical diseases mentioned in the policy by the insurer, a lump sum amount is paid to the policyholder.
Waiver of Premium on critical illness: Future premiums are waived off if the policyholder is diagnosed with a critical illness mentioned in the policy during the policy tenure.
Waiver of Premium on disability: If a policyholder becomes permanently disabled during the tenure policy, your future premiums would be waived off.
Before buying a term insurance plan, there are a lot of points that you should consider. Be sure to compare various plans on Elephant before finalizing the one you want to buy.
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