A term plan or a term insurance policy is a pure life cover plan which secures the future of the policyholder’s loved ones or family members or nominees in case of his/her untimely demise. The policyholder pays a decided premium amount either on a monthly or yearly basis. As the awareness with respect to term plans is increasing, more and more people are buying them.
Buying a term insurance policy is a simple thing. There are several insurance companies, such as Tata AIA Life insurance and many others, that are offering different life insurance and term plans to meet the diverse requirements of people. The term plan can be applied to anyone irrespective of being a senior citizen, working woman, salaried person, married couple, young individuals, etc. There is no limitation. However, there are set eligibility criteria that the applicant should meet to buy a term plan.
But, the main question that comes to mind is what one should check or consider to buy the best term insurance. Thus, we have listed certain essential factors or points that one should consider while looking for a best-term insurance plan.
Factors to Consider While Looking for a Best Term Plan
Read more and know about the factors which will help you in choosing the best term life insurance policy.
- Choose the best Insurer or Insurance Service Provider:
With plentiful options in hand, it does become difficult or challenging for the applicant to choose the best insurer. However, there are certain factors which can help in deciding one.
- Market reputation: The person should do a background check and know about the market reputation of the insurer. This can be done by analysing the complaints and grievances ratio of the insurer.
- Higher solvency ratio: The person should choose the insurer which has a higher solvency ratio. It shows the ability of the insurer to meet long-term liabilities.
- Financial background: It is essential to research and know about the financial background of the insurer. This will help the applicant to know whether the insurer is capable enough to meet its both short and long-term liabilities during adversities.
- Claim settlement ratio: The person should choose an insurer whose claim settlement ratio is higher.
- Decide the option for Payout
The applicant has to decide upon the payout method because that is how the premium amount will be paid. You can opt for a monthly payout or lump sum payout depending on the plan.
- Deciding the policy period
The applicant needs to decide on the policy period in order to finalise the term plan. There are certain factors which will help in deciding the policy period. They are: On the basis of age, the basis of retirement age and the basis of financial responsibilities of the applicant.
- Know about the term plan cover amount
Initially, it is difficult for the applicant to decide upon the amount of term insurance he/she is willing to cover. But there are certain pointers that can help you in finalising the term insurance cover amount. They are:
- Age of the applicant
- Financial responsibilities
- Future financial requirements of the applicant
- Routine expenditures
- Current loans in hand
- Calculate rising costs and inflation
Conclusion
Term life insurance is a long-term agreement between the policyholder and insurer that promises financial security and cover for his/her family members. Thus, one should study different policies properly, check the above-mentioned points, analyse term insurance benefits and then buy it.