A term insurance plan is like a security blanket — financially of course. In the event of unforeseen circumstances, insurance is what will help you and your family’s financial needs.
Lately, there has been a surge in the number of term insurance plans available. And so many options have made it difficult for working professionals to choose what plan suits them best.
It’s National Insurance Awareness Day and we’d like to help you make a well-informed investment decision. So, we have pinned down 5 tips that you can resort to before you sign up for an insurance plan.
Your “need” first
Purchase a plan based on your needs and not on what your peers suggest you might need. The purpose of a term insurance plan is to meet your family’s needs in your absence. So, before you sign up for anything:
- It is essential to keep their needs in your mind.
- Assess your source of income, the number of dependents, all your existing debts and liabilities such as home loans, car loans and education loans.
- Account for all expenses that you incur to maintain your present lifestyle.
- Choose the right policy that has terms and conditions that work in your favor.
Online insurance shopping
When you’re looking to buy a term insurance plan, note that there are three types: basic term plans, plans with a monthly income and plans with increasing monthly incomes.
Before you buy your plan do a comparative study on each plan weighing pros and cons—only then will you land the best deal based on your preferences.
Once you know which term insurance plan suits you best, buy online! It is quick and hassle-free and it even allows you to calculate your premium in real-time.
Pick the best cover-up
While you are insurance shopping, ensure that the sum assured covers your existing and potential future liabilities.
Remember the rule of thumb and choose a cover that is at 12 times your current annual income. At the same time, also take into account inflation and make the correct assessment.
Know your riders in support
Riders are additional benefits that often enhance the scope of protection offered by a term insurance plan. Riders are features or benefits that strengthen your base policy.
You can choose either one or multiple riders for your term insurance plan, thereby increasing the level of protection.
A Comprehensive Accident Benefit is a good example of a rider. It provides additional protection in the event of a partial or total disability due to an accident.
Note: A rider will make your premium slightly expensive. But in the end, it is worth it because it only provides extra benefits to protect your loved ones.
Be an early bird
This goes without saying for all investments. The sooner you start, the better. Because procrastination is a thief of time. Start investing while you’re still young and you will have more income available later. So, if you are planning to buy a term insurance plan, then now is a good time to invest in your future. Then your risk is lesser as compared to someone older and can access higher benefits at lower premiums.