Since the COVID pandemic, there has been a significant increase in people’s awareness about insurance. People are actively purchasing life insurance, health insurance, and term insurance. In this article, we will discuss term insurance, which benefits the nominee in case of the untimely death of the family’s primary breadwinner. This insurance proves to be extremely helpful for the family and the nominee during such difficult times. However, the question remains: which term insurance should you buy? What should you keep in mind while purchasing it? Let’s understand this step by step.
1. Understand Your Needs
Before purchasing term insurance, assess your needs. Consider how much money your family will need if you are no longer around.
- Analyze any home loans, personal loans, children’s education, and other responsibilities.
- Calculate the future requirements keeping in mind the effects of inflation.
- Many insurance companies offer free calculators and advice, so feel free to take their help.
2. Don’t Hide the Truth
When buying term insurance, be honest about your habits and health.
- If you smoke, don’t hide it. Concealing this could increase the chances of your claim being rejected.
- Insurance companies conduct thorough checks when processing claims, so being truthful is crucial.
3. Choose the Right Insurance Company
Selecting the right company for your term insurance is important.
- Check the company’s experience in the market and the size of its business.
- Look into the settlement amount and the settlement ratio. Avoid companies with a settlement ratio lower than 98%.
- You can find this information on the IRDAI website.
4. Pay Attention to Riders
Examine the riders included in the plan, such as critical illness or accidental coverage.
- Ensure these benefits are offered separately and not added to the base sum.
- For example, if a plan offers 1 crore and provides 30 lakh for critical illness, the remaining sum would be only 70 lakh, which might not provide sufficient coverage.
5. Don’t Expect Returns
Term insurance is bought for providing security during tough situations, not for returns.
- Plans offering returns tend to be more expensive, and their benefits are usually limited.
- Purchase term insurance with the focus on security and not for investment purposes.
Term insurance is an essential tool for providing financial security to your family. Before purchasing it, make sure to assess your needs, understand the company and plan thoroughly, and make an informed decision. Remember, small precautions based on honesty can go a long way in ensuring your family’s financial stability in the future.