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    Comprehensive Guide to Find the Right Term Policy for a Secure Future

    Published on July 25, 2020

    When you are young and healthy, you do not consider the future uncertainties that could arise. However, as you grow older, you assume more and more responsibilities that come with different life stages. Therefore, you need to plan your finances to meet life goals.

    A financial plan includes multiple aspects, such as investing, insurance, and savings. A life insurance cover is an indispensable part of your investment portfolio. It will help to financially safeguard your family in your absence. It has many types; however, a term insurance plan is one of the most useful forms of life insurance.

    What is term insurance?

    A term insurance policy is a pure life cover that is available at an economical premium. This plan pays a lump sum to your beneficiaries in case of your absence during the policy period. However, if you survive the policy term, you do not receive any maturity benefits unless you buy a term plan with a return of premium.

    The premium on term insurance is lower because there is no investment component and the entire amount that you pay is towards mortality charge. Therefore, you can buy higher coverage without any financial distress.

    Here is a detailed guide on how to choose the best term insurance plan for maximum benefits:

    1. Pure protection cover

    If you want only protection cover, opt for a basic term plan that pays a lump sum in case of a mishap. Ideally, you should choose a sum assured, which is approximately 15 to 20 times your annual income to ensure your family can maintain their present lifestyle without any financial difficulties.

    • Reasonable premium

    One of the term insurance benefits is its affordability. Several insurers offer higher coverage at lower premiums. A common perception is that if you pay a high premium, you receive better coverage and vice-versa. However, reputed insurers offer cost-effective term plans. You must compare other features and terms and conditions along with the premium to make an informed decision.

    • Benefits payout option

    You need to select an alternative as to how your beneficiaries will receive the sum assured in case of an unforeseen circumstance. Choose an option as per the requirements of your family. Most insurers offer full and partial payout options. Under the latter alternative, your family members receive a certain amount as a lump sum and the balance funds in periodic installments, ensuring that they can meet their regular expenses.

    • Additional coverage

    Insurance companies allow you to add riders to your base plan, which are beneficial in enhancing the coverage. Some of these are critical illness, accidental death, disability, and waiver of premium. Based on your situation and needs, you must choose appropriate riders to maximize the offerings of your term plan. However, bear in mind that they are available at an extra but modest premium.

    • Flexible premium

    As you near the retirement age, protecting your savings is important. If you maintain a healthy lifestyle, reducing the possibility of an uncertainty, consider an insurance policy that allows you to modify the premium, as you grow older. With a flexible premium plan, you can procure coverage at a lower amount when you are young and single. The same plan will let you increase the coverage for an additional premium as you get married and start a family. Ideally, the policy should enable you to reduce the coverage and premium when your dependents grow up and become self-sufficient.

    Choose a suitable plan by keeping your present scenario and family requirements in mind. Analyze the different options available and take help of an online term insurance premium calculator to work out various combinations. Do your research online and compare different plans to make an informed choice.

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