Term Insurance Comparison - Key to Finding the Best Coverage

Term insurance is a way to ensure that your loved ones are financially stable even in your absence. To choose the best term plan, one must do a thorough comparison and choose a product that is most suitable for them. Let us find out the key to finding the best term plan coverage.

A term insurance plan is a type of life insurance policy that provides life cover to the policyholder for a specific period of time. You pay premiums to the insurer for a specific period of time, and within that period if you pass away, then your family will be paid the death benefit so that they can carry on living comfortably and secure their goals.

Life is filled with uncertainties and if you’re a breadwinner for your family, then it's likely that they depend on you for their financial needs. In case if something were to happen to you, your family’s sole source of income will be cut off and this can put them in financial jeopardy. A term insurance is a great tool to help avoid this and make life easier for your family as far as finances are concerned. Additionally, term insurance is one of the cheapest forms of life insurance and it is always a good idea to sign up for one as soon as you start earning.

There are a lot of insurance plans to choose from and you must choose your plan wisely. To do so, a thorough comparison of all the available plans is the key. All you must do is log on to the various insurance providers websites and compare plans that suit you the best.

Premium payment options

When you compare term plans, always look for the premium payment options available. A premium can be paid either as a Limited Pay (Fixed duration of payment that is less than the policy term), Regular Pay (Regular installments) or Single Pay (One time payment).Even within the regular pay options, you can choose to pay the premium on a monthly, quarterly, half yearly, or annual basis, depending on your financial strategy and convenienceRiders Available Under the Term Insurance PlanA basic insurance plan cannot cover all the numerous risks that you may possibly face. Hence insurance companies offer various add-ons also called as riders with the basic plan from which you can choose the ones that cover the risks that you are more likely to meet. These riders can be availed by paying a little extra amount on the premiums you pay for the basic policy.Here are some of the popular riders that people choose:

• Critical Illness Rider – A critical illness rider covers many deadly ailments like cancer, tumour, etc. The cost of treatment of such ailments can impact on anyone and hence this rider is suggested in case you think you have a family history of such illness or symptoms.
• Accidental Death Rider – This rider covers the accidental death benefit. Basically, it provides the sum assured with rider benefit to the beneficiaries of the policyholder that works as additional financial protection.
• Cashless Treatment Rider – With this rider, you can avail complete cashless treatment at the time of surgery or ailment, provided the hospital must fall under the network list of your insurance company.
• Premium Waiver Rider – This rider waives off all the future premiums in case the policyholder dies early or suffers permanent disability so that there is no financial burden on the family to pay premiums. The sum assured in this policy remains unaffected.

Your Coverage And Your Premium

Your life cover is the amount that should be sufficient for all your family’s needs. So, ensure that you calculate their requirement correctly. Your premium is directly dependent on your life cover, so the higher your life cover, the more will be your premium. To better understand what your premium could be, use an online term insurance calculator and find out your premium amount.

Claim Settlement Ratio of Insurer

The claim settlement ratio of an insurer is the percentage of settled claims of an insurer. A high claim settlement ratio means that the insurer has approved more number of claims and settled the amount. A ratio above 90 % is usually considered good.

i) Basic Term Plans

It is the simplest form of term insurance . The life cover is a fixed amount that the nominee receives after the policyholder’s demise. There is no maturity benefit or other features.

ii) Return of Premium Plans (TROP)

This type of term insurance comes with a maturity benefit option wherein, if the policyholder survives the term period, then their paid premium is returned as a maturity benefit.

iii) Increasing or decreasing life cover

Term plans also exist where the life cover increases every year whereas the premium remains the same. The premiums for such plans are usually higher right at the outset, but such plans are useful if one requires a higher life coverage as they get older.Similarly, life cover for some plans also decreases every year. Based on your needs you may choose any of the above. Also Read: What is Term Insurance?

When it comes to buying term insurance, the earlier the better. As you grow older, the premium for a term insurance keeps increasing. Given below is a table that shows how the premium will increase as you grow older. The given example is for a non-smoking male.

A term insurance plan is a good investment to ensure the financial security of your family. It is an absolute must if you are the sole source of income for your family. The above table clearly shows that waiting to buy a policy will only increase the premium. So, it is better to buy a term plan sooner rather than later. Keep the points in this guide in mind and start your term insurance plan comparison today. You need to make the most of a term plan so that your family can get the best benefits.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.