How to choose term insurance?

What is a Term Insurance Policy?

Term insurance is a pure life insurance policy. The plan covers the policyholder for a specific tenure, say 10, 20, 30 years, or even longer. During the policy tenure, if the life assured passes away, the nominee receives a death benefit. However, if the life assured survives the policy, there is no maturity benefit. This is why it is termed as a pure life insurance cover.

Note: A TROP (Term Return On Premium) plan is a term insurance policy that provides maturity benefits upon surviving the policy tenure. If the individual outlives the policy, then the premiums paid so far are returned as the maturity payout.

Investing in a life insurance policy, like a term plan, has become the need of the hour. Owing to the rising health concerns, growing awareness among people, and various uncertainties we face in life, securing your life can indeed be one the most valuable decisions. Whether you are a young adult or in the prime years of life, purchasing life insurance is always a wise decision.

Tips to Choose the Best Term Insurance Policy in India

In India, there are approximately 27 life insurance companies offering different types of life insurance products. Having so many options gives you the flexibility to compare and choose the one that best suits your needs.

Here are some striking tips that can help you select the most

1. The Sum Assured Amount
   The purpose of a term life insurance plan is to protect the financial needs of your family even when you are no longer around. So, choosing the correct sum assured amount is a must. The sum assured amount that is able to sustain your family for at least a few months to a year is a safe idea.
   Tip: You must calculate the essential expenses of your family by also keeping in mind the current liabilities, upcoming expenses and inflation over the years!
2. Company's Claim Settlement Ratio
   The claim settlement ratio of a company speaks about the ability of a company to settle claims raised by the customers. Try to choose a company that has a high claim settlement ratio, as it implies that your claim is also highly likely to be settled.
   Tip: A company with a consistent claim settlement ratio is the most reliable one. So, make sure to check the CSR of the past few years.
3. Insurer's Solvency Ratio
   The solvency ratio reflects the financial strength of a company and its outstanding debts. A solvency ratio of 1.5 or more is a safe option. Only when a company is financially sound and stable are they able to settle your claims without any hassle.
   Tip: You may check the solvency ratio of a company in its annual report, which is available on the IRDAI website.
4. The Premium Payable
   The premium that you have to pay in return for the life insurance coverage is an important consideration. Plan a budget so you can search, compare, and purchase the most suitable one under your budget.
   Tip: Make sure to calculate your ongoing financial commitments and emergency fund requirements to decide on a practical budget for the term insurance premium.
5. Critically Analyse Your Lifestyle
   Your lifestyle directly impacts your health and mood. To mitigate the potential risks associated with your occupation, lifestyle, and habits, it is essential to decide a tenure and coverage amount accordingly.
   Tip: Opting for a longer-term insurance tenure is always a safe choice.
6. Critical Illness Cover in the Policy
   Certain term insurance plans may offer critical illness coverage as well. In case a listed critical illness is diagnosed, the life assured may receive a lump-sum payout.
   Tip: Check for the critical illness cover in the policy before purchasing for a more comprehensive cover.
7. Add-ons Available
   Add-ons are the additional coverage that you may purchase with a term insurance plan. However, the option of add-ons may differ from one insurer to another. Some common options include accidental death, disability, and premium waiver.
   Tip: Choose add-ons that you actually need to avoid unnecessary premium hikes.
8. Insurer's Market Reputation
   What customers say about a life insurance company is essential to consider before purchasing term insurance. For this, you may search for online reviews and testimonials by customers.
9. Compare Term Insurance
   When you have shortlisted a few options, make sure to compare them for more clarity. It is much easier to compare the policies online and find out the most suitable one for your needs.
   Tip: At Jio Insurance Broking, you can easily compare term insurance without any hassle.
10. Read the Policy Documents
    Do not skip reading the policy documents before purchasing it. The fine prints give you a detailed idea of the policy and proper understanding.
    Tip: Do not hesitate to ask your insurer for any terms or clauses that you do not understand.

Conclusion

In this era, protecting the finances of your family is a priority for most people. In this regard, term insurance can be an ideal choice. Not only this, life insurance also gives you much-needed peace of mind and security. A term insurance policy is the simplest and purest life insurance policy. Understanding the policy is also quite easy.

With a little effort, you can get the most suitable term insurance. Make sure to compare different plans to choose the one that is best for your interests. At Jio Insurance Broking, we let you easily compare various term insurance plans. Connect with us to get your desired life insurance product today!