4 Tips to Choose a Term Plan Policy

We are always told to be an optimist in life, but there are some rare instances where preparing for the worst possible can benefit you. Getting enrolled in a term plan is one such instance. One can never plan for the emergencies and severe eventualities that life throws your way. However, you can always be prepared so that your family is not left financially insecure. 

There are numerous term plans on offer in the market, which is why before buying a term insurance policy you should be careful about the following points. 

1. What is the Value for Your Life? 

Term insurance is primarily bought to safeguard the financial status of your family in case of any eventualities. This means the sum assured of the term plan is the financial value of your life. Insurance providers arrive at this value by using different parameters such as your age, presence of any pre-existing disease, your premium amount etc. However, you also need to understand that these parameters match your expectations. If you feel that the premium you pay is way more than the sum assured, then there is no point buying that policy. 

2. Make Sure the Inflation is Adjusted 

The sum assured for a term policy is paid either on the demise of a policyholder or after the maturity period is complete. Even though in both cases, the inflation needs to account for. The inflation in developing economies plays a major role in the ROI of long-term investments. The sum assured by the provider may seem a lot of money today, but with term period the value of all other items around you would increase, but your amount will remain the same as compared to the present rupee value. 

3. Check the Claim Settlement Ratio (CSR) 

Another important parameter that helps you decide which insurer to choose and which to reject is the claim settlement ratio. It means the ratio of claims made to that of the claim accepted as well as processed successfully, resulting in the money being disbursed. Most companies claim to have a good CSR, which can be as high as 96-97 %. But, as a consumer, you need to validate the claim through other sources as well. Apart from the other credible sources, you can also follow the report released by IRDAI (Insurance Regulatory and Development Authority), the nodal body that regulates the insurance sector. 

4. Look for Custom Riders 

It is known that life insurance only covers the risk of death, but that does not mean that you will have 10 other policies for 10 other risks. Many providers have riders that cover other aspects of your life, be it critical illness, accident cover, disability so on and so forth. So, you need to check which riders are required in your case and accordingly plan your purchase. 

Term plans are considered one of the best forms of life insurance due to their economical premiums and flexible terms. However, the return of investment might not be as high as other investment plans. So, it all ends with what suits your finances and not what is best in the market.