Many people take their health and lives for granted. They are under the impression that uncertain events cannot occur in their lives. Unpredictable events can occur at any time and a wise thing to do is ensure that the family members (or dependents) do not have to bear the brunt of this uncertainty. The best and most affordable term insurance plan can provide financial security to your family in your absence.
Choosing the best and most affordable term insurance plan is not a simple task, as you have to be clear about the policy, period, premium, and plans that suit your requirements. By the end of this blog, you would be in a comfortable position to take an informed decision about investing in the best term insurance plan.
Here are the essential factors that can help you in choosing the term insurance plan that suits your requirements:
Buy Term Insurance Online
Buying a term insurance online vis-à-vis term insurance offline makes a lot of difference. By going online, you can compare policies from different insurance companies and invest in the one that suits your needs.
As no intermediaries (i.e. agents) are involved in the process, buying term insurance online works much cheaper in comparison to the offline medium. As you are not interacting with any insurance agents, your choice and decision is unbiased. Offline plans are expensive when compared to online plans. It is recommended to buy term insurance online directly from the insurance company’s website.
Be specific about the policy tenure
Policy tenure is as important as the insurance cover. In ideal cases, you would want the term plan to provide coverage till the age you intend to work. Across the world, life expectancy has increased steadily and it makes sense to have coverage for a longer period (till 70 years). It is better to invest in term insurance plans at an early age since it can have an impact on the premium that you pay for the insurance.
There is a correlation between the age and the premium amount. Early 20s is the best time to invest in a term plan since you are healthy and you may end up paying a lesser premium in comparison to investing at a later stage in life (e.g. 30+).
Claim Settlement Ratio
When short-listing the insurance company, you should have a look at the claim settlement ratio of the company. Claim Settlement Ratio is the percentage of claims paid out of the total claims filed in a particular year. The higher the percentage, the more equipped is the company in settling claims.
In the last financial year, ICICI Prudential Life Insurance settled 10,938 claims out of 11,034 claims. Investing in a term plan offered by a company with such a high Claim Settlement Ratio indicates that your dependents can claim the insurance without any hassles.
Solvency Ratio
This is another important criterion that should be taken into account when opting for the best and most affordable term insurance plan. The solvency ratio indicates the financial capability of the insurer in settling claims.
In case of a natural disaster, the insurer will be flooded with claims. If the insurance company is financially capable, these claims can be settled (within the defined timeline) else your dependents will have to tirelessly follow up about the status (and progress) of claim settlement.
Opt for a term insurance plan from a company that has a top-notch solvency ratio (i.e. 1.5 to 2.5).
Premium Cost and Critical Illness Cover
Customers have the option to pay premium either monthly, quarterly, half-yearly, or yearly. The premium being paid will vary based on the payment cycle chosen by you. You would end up paying more premium if you choose the monthly cycle. If you are financially equipped, it is recommended to go for half-yearly or yearly cycles where the entire premium amount is paid in one tranche (i.e. yearly) or two tranches (i.e. half-yearly).
You also have the option to supplement your term plan with critical illness cover that helps in covering the treatment costs for critical illnesses such as brain surgery, cancer, etc. You would have to pay an additional premium for getting this additional cover (on top of the basic life cover).
Conclusion
Term insurance plan with basic life cover is the most affordable option when it comes to term plans. However, when investing in a term plan, you should have long-term visibility and opt for additional cover depending on your requirements.
Term Insurance Plans is an absolute necessity since it provides financial security to your dependents when you are not amongst them.
