Safety is something we tend to naturally prioritize in life. Right from locking our doors every night to using seat belts before heading out for a drive, we do all we can to remain safe. If you wish to extend this regard for safety to your family and loved ones, insurance is one of the ideal product to look for. Life is no doubt uncertain, and in case something untoward were to happen to you, insurance can help your family carry on without any financial stress even in your absence.
If you are interested in purchasing a life cover without overshooting your budget, term insurance may be one of the preferred choice for you. Term insurance premium is generally lower than the premium charged for other kinds of life insurance. This makes term insurance the most affordable kind of life cover you can purchase.
Nowadays, there has been an increase in the number of insurers offering some of the cheapest term insurance plans. With so many affordable options for term insurance in India, it may be tempting to go ahead and purchase the cheapest term insurance option you can find. However, that may not be the best way to go about it.
Why going for the cheapest term insurance plan might not be your best bet
When you purchase the cheapest term insurance available, the one of the key advantages you experience is that the term insurance premium is extremely low. This may be the driving factor inciting you to choose the cheapest term plan you can find. However, this may not be the best option for you due to a number of reasons.
In exchange for affordability, you would not want to trade the financial safety and security of your family and loved ones. Therefore, that is one reason why the cheapest term insurance in India may not be the best choice for you.
Additionally, when you focus only on the price, you may lose sight of other essential parameters that you ought to consider before buying term insurance. If the insurer’s claim settlement ratio is not high, your family’s claim may be rejected in the event of your unfortunate demise, leaving them with no safety net.
Therefore, to avoid these possibilities, you need to look beyond just the term insurance premium. There are many other factors to consider.
Other factors you should consider before buying a suitable term plan
Aside from the term insurance premium, these are the other factors that you need to consider before buying a suitable policy for term insurance in India –
1. Your family’s needs and requirements
This is one of the key factors to consider before you decide on which term plan to purchase. Your family members may have different needs and requirements. Their life goals also need to be considered. For instance, if you have dependent parents, you will have to factor in their post-retirement requirements before buying a term plan. Your spouse may wish to buy a house and your children’s life goals may include enrolling in a top university. You must factor in such needs and goals and purchase an adequate life cover.
2. The debts in your name
As you move from one life stage to the next, you may likely accumulate debts and liabilities in your name. For instance, you may have a personal loan or a housing loan taken out to finance the purchase of a house. In the unfortunate event of your demise before these liabilities have been fulfilled, your family may need to repay them. Without any financial safety net to fall back on, they may find it tough to do so. This is why you must also consider the debts in your name before you buy a term plan. The cover must be sufficient to repay your debts in your absence.
3. The tenure of the plan
The tenure may not seem like an important factor, but it is imperative that you consider the tenure of the plan for two main reasons. Firstly, the tenure must be long enough to cover the possibility of your unfortunate demise. If the tenure is too short, your cover may not be valid later in life, which is when you may need it more. Secondly, the tenure of the plan must overlap with your earning years, so you will find it easier to meet the term insurance premium costs. When you pay your premiums regularly, your policy remains active.
4. The claim settlement ratio of the insurer
This is another critical aspect to consider before buying a term plan. The claim settlement ratio indicates the number of insurance claims paid by the life insurance company in proportion to the total insurance claims they received. A higher claim settlement ratio is a good indicator, because it means the insurance company honours their end of the insurance contract. So, look into the claim settlement ratio before making your purchase.
Clearly, making a purchase decision based solely on the term insurance premium is not a good idea. You need to look past the cheapest term insurance in India and zero in on a plan that will actually benefit you and your family in the future.