A life insurance policy is an essential investment that every earning individual should consider. It provides the policyholder’s nominees with financial cover in case of an unfortunate event. If you are looking for an affordable but effective solution, consider buying a term plan. If you are asking yourself, “what is term plan,” read on to understand?
What is a term insurance plan?
A term plan is one of the simplest forms of life insurance. It offersmonetary security to the nominees in case of the policyholder’s absence due to an unfortunate event. Such policies provide a substantial cover at an economical premium. However, they do not have any maturity benefit.
Many life insurance companies in India offer a variety of term plans. To buy a suitable policy, you need to compare them thoroughly and find the one that meets your requirements. Here is a list of factors you can consider:
- Payment options
A term plan’s premium is nominal and comes with flexible payment options. The three most common choices are:
- Regular pay: You pay the premium throughout the entire policy tenure
- Limited pay: You pay the premium for a specific period, which is shorter than the actual tenure of the policy
- Single pay: You pay a lump sum once when buying the policy
In the case of regular and limited pay, you can choose among monthly, quarterly, and annual payment options. All these flexibilities help to find a payment option according to your budget. You can compare payment options of different policies to opt for the one that suits you.
- Coverage
A term life insurance policy generally offers a huge payout. However, it is vital to take some time comparing different term plans to determine the cost that you would incur. The premium depends on the value of life insurance coverage. If you want substantial coverage, the premium will be higher. Thus, you must compare the prices and find a suitable plan. Deciding the coverage is also an important task. It should be enough to ensure your family’s future financial comfort.
- Riders
One of the best things about term plans is that you can add riders to your existing policy and enhance the policy’s benefits. Riders are extra covers that you can includein the plan by paying a higher premium. Insurers offer various riders with a term plan. These include critical illness, accidental disability, and waiver of premium, among other add-ons. These riders add long-term benefits, further securing the monetary future of your dear ones. However, not every insurance company offers all the riders with their term plans. Hence, you must compare the riders offered with different policies before buying one. This process will help you choose a more effective plan.
- Maximum policy tenure
You can buy a term life insurance plan for a specific period. However, you never know what the future holds; making it tricky to decide what should be a sufficient tenure. It might be wise to buy a term plan that stays active for as long as you are working, or maybe even longer. To ensure that, you need to find a term policy that offers an extended policy duration. A quick online comparison among different policies will help you in making an informed decision.
- Claim settlement ratio
The claim settlement ratio of an insurer is the percentage of policy claims that they settle annually. Choosing an insurance company with a higher claim settlement ratio will increase the chances of settlement if your nominees have to make a claim. You can analyse the claim settlement ratio of different insurers and opt for the one who has a strong track record.
When you decide to buy term insurance, you can consider these aspects and search for an ideal plan for your family. You can then easily purchase it from the insurer’s website.