No one likes to think about their own mortality, but the truth is, anything can happen at any time. That's why it's essential to be prepared for the worst.
One way to do that is to buy term insurance, which provides financial protection for your family in case of your unexpected death.
However, with so many plans available, choosing the right one can be daunting as it can be a troublesome task to choose the right plan from the pool of plans available out there.
In this article, we'll give you some tips on how to buy the best term plan that fits your needs.
Determining Term Plan Coverage Needs
The first step in buying a term plan is to determine your coverage needs. How much money would your family need if you were no longer around to provide for them?
It's crucial to get enough coverage to ensure your family can maintain their current lifestyle, pay off debts, and meet future expenses. A good rule of thumb is to buy coverage that's ten times your annual income.
It's essential to consider all your debts, including mortgages, car loans, and credit cards. Your coverage should be enough to pay off all these debts. Additionally, consider future expenses such as your children's education or your spouse's retirement plans. You don't want your family to struggle to meet these expenses if something were to happen to you.
Heads Up: It takes an average person up to 5 hours to read & analyze a policy, and 10 hours or more to compare different plans and make a decision.
This is why we propose a better alternative - taking a 30-minute FREE consultation with Ditto’s certified advisors. We have a spam-free guarantee, and we’ll never push you to buy a plan. Don’t delay this - we have limited slots every day, so book a quick call here before they run out.
Considering the Term Plan Features
Once you have determined your coverage needs, it's time to consider the plan features. There are different types of term plans, and you need to choose the one that fits your needs.
Some of the most important plan features to be considered are :
- Policy term: It is the duration of the insurance coverage. Ideally you should choose a policy term that provides coverage until your retirement age, so your family is protected for the long term.
- Premium payment options: There are different premium payment options available, such as monthly, quarterly, or annual payments. Choose a payment option that fits your budget.
- Riders: Term Plan Riders are additional benefits you can add to your policy to enhance your coverage. For example, you can add critical illness or accidental death benefit riders to your policy.
It's important to choose the right plan features that meet your needs. Don't be tempted to choose a plan just because it's cheap. You want to ensure that your family is adequately protected.
Comparing Plans from Different Term Life Insurance Companies
The next step is to compare different plans from different insurers. There are many insurers offering term plans, and it can be overwhelming to choose the right one. However, taking the time to compare plans can help you find the best one for your needs.
You might think that what could be the right parameters to compare the plan, here are some basic though essential variables for it :
- Premiums: Compare the premiums of different plans. By comparing plans, you can find a plan with affordable premiums that offer adequate coverage.Make sure you're getting the best value for your money.
- Coverage options: Look at the coverage options provided by different plans, Different insurers offer different coverage options. By comparing plans, you can find a plan that meets your coverage needs. Also, evaluate your ideal term insurance coverage through our term insurance calculator.
- Claim settlement ratio: Check the insurer's claim settlement ratio of term insurance company to see how many claims they settle.
- Riders: Consider the riders offered by each plan, such as accidental death benefit, critical illness benefit, or waiver of premium benefit.
- Insurer's reputation: Choosing the right term plan is essential. You don't want to end up with a plan that doesn't meet your needs or a company that doesn't have a good reputation. A company with a good reputation is more likely to provide prompt and efficient service in the event of a claim.
Choosing the right insurer is just as important as choosing the right term plan.
You want to ensure that the insurer you choose has a good reputation and strong financial strength.
Here's why:
- Reputation: The insurer's reputation is an indication of their customer service and claims settlement record. You don't want to end up with an insurer that has a bad reputation.
- Financial strength: The insurer's financial strength is an indication of their ability to pay claims. You want to choose an insurer that has a strong financial standing. An important financial indicator is the Solvency Ratio which is also published by these insurance companies and reviewed by IRDAI.
Here are some tips for checking the insurer's reputation and financial strength:
- Check Ratings from Rating Agencies: There are several rating agencies such as CRISIL, Moody's, Standard & Poor's, and Fitch that provide credit ratings for insurers. These ratings are based on the insurer's financial strength and their ability to meet their financial obligations. An insurer with a high credit rating indicates that they are financially stable and have a low risk of defaulting on their obligations.
- Check Claim Settlement Ratio: Claim settlement ratio is the percentage of claims settled by the insurer against the total number of claims received. A high claim settlement ratio indicates that the insurer has a good track record of settling claims. You can check the claim settlement ratio on the insurer's website or by contacting them directly.
- Research Online: There are several online forums and websites where customers can share their experiences with insurance companies. You can read reviews and feedback from customers to get an idea of the insurer's reputation and customer service.
- Check Company's History: Check the company's history to see how long they have been in business and their financial performance over the years. A company with a long history of successful operations is more likely to be financially stable.
- Ask for Recommendations: You can also ask for recommendations from friends, family, or financial advisors. They may have experience with a particular insurer and can provide you with valuable insights.
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Conclusion
Buying the right term plan is a crucial part of financial planning.
It provides financial protection for your family in case of your unexpected death.
However, choosing the right term plan can be challenging. By seeking help from third-party agencies like Ditto, comparing plans from different insurers, and checking an insurer's reputation and financial strength, you can make an informed decision and ensure that you get the best plan for your needs.
