Term insurance is the best form of insurance as it gives a very high coverage at a low price. The premium of a term insurance plan is a fraction of what you have to pay for buying an endowment, moneyback or unit-linked insurance plan (ULIP) with the same coverage. This is because there is no investment component and entire premium goes towards covering the risk. Best term life rates.
You can easily compare all the available policies in market from all top insurance companies in few seconds to choose the best policy as per your needs from here- Term
Here are some pointers to remember while buying a term insurance plan:-
Just buying a term insurance plan will not serve the purpose, having the right amount of coverage is the most crucial thing while purchasing a term insurance plan. This is because term insurance is meant to replace one’s income after he dies. To arrive at the right amount of coverage that one require one needs to add basic expenses that his family will incur, major expenses such as education and marriage of his children and liabilities such as home loan, car loan etc. If life cover is inadequate it defeats the whole purpose of insurance. Hence, look out for a term insurance plan that offers the amount of coverage that you require.
Along with coverage amount, it is also important term insurance plan should offer cover till you need it. Basically, a term insurance policy should cover a person until the age he intends to work. Hence, don’t take a short-term cover of 15-20 years that ends when you are in your 40s. Choose a term insurance plan that offers cover till you require it.
The amount that you may think sufficient might not be enough after few years. Therefore, some companies offer plans where the cover increases by 5-10 % every year or indexed to inflation. As your sum insured increase automatically in coming years, it will take care of the increase in your income as well as inflation. Some insurance companies also offer a plan that allows policyholders to increase the sum insured in certain stages of their life.
While buying a term insurance plan is very important to check claim settlement of insurance companies. This is important because your nominees will have to contact the insurance company to get the claim. Hence, choose an insurance company that have good claim settlement ratio and claim procedure is hassle free.
Before purchasing any insurance plan it is very important to go through what are the exclusions of the policy.
Go for term insurance plans that have lowest charges as this will lead to lower premiums for the same cover.
You can make your term insurance plan more comprehensive with add-on covers at minimal cost. An add-on cover or rider offers benefits over and above the basic policy. You can attach add-on covers to your term insurance plan. Some of the popular riders are critical illness cover, waiver of premium etc.
The Internet has made buying term insurance plans very less time-consuming and convenient. And online term insurance plans are also a cheaper option as there is no intermediary and cost is passed on to policyholders.
Read more details here- Step by Step Guide to Choosing the Perfect Term Insurance Plan
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There are a number of term insurance plans offered by life insurance companies, both; online as well as offline. So, how should one go about identifying the best term life insurance out there?
The best term insurance plan is one that suits your requirement. You should consider the following points to arrive at your best term insurance plan:
1. Claim settlement ratio (CSR): The claim settlement ratio refers to the number of claims settled by the insurance company out of every 100 claim requests it received in a year. Higher the CSR for an insurance company, the better.
As per the latest data available on the IRDAI website, the companies with the highest claim settlement ratio for the last 3 years are as follows:
Please note the above CSR is for the company overall and not just for term insurance plans. IRDAI does not publish product / plan wise breakup of CSR data.
2. Premium: You need to check the premiums of term insurance plans with similar features and evaluate which one offers you more value for money. You can check the comparison of premiums and features of online term insurance plans of 6 life insurance companies on our blog.
3. Maximum tenure of the plan: Most term plans will cover you for a maximum tenure of 35 to 40 years. TotalSecure+ from Edelweiss Tokio offers a maximum plan tenure of 62 years. This can cover you well beyond your retirement age of 60 years up to a maximum age of 80 years.
4. Claim pay out options: Life insurance companies offer various claim pay out options for the customers’ convenience. Evaluate the various claim pay out options offered under various term plans and choose the one that suits your requirement. For example Max Life Online Term Plan Plus comes in the following 3 variants:
a) Basic Life Cover: Pays 100% of the sum assured on death
b) Basic Life Cover + Level Monthly Income: Pays 100% of the sum assured on death + 0.4% of the sum assured per month, for 10 years
c) Basic life cover + increasing monthly income: Pays 100% of the sum assured on death + Increasing monthly income for 10 years.
5. Riders: Evaluate if you need to purchase any riders with the term plan and check whether the term plan is offering those riders. For example Edelweiss Tokio Life TotalSecure+ offers a choice of four optional riders, which include:
a) Accidental Death Benefit Rider
b) Accidental Total and Permanent Disability Rider
c) Waiver of Premium Rider
d) Hospital Cash Benefit Rider
Some companies offer some in-built riders in the basic version of the plan or in the variant of the plan. So choose the plan as per your need.
6. Option to increase life cover at key life stages: Evaluate if you would like to increase your life cover at key life stages like marriage, child birth etc. For example ICICI Prudential iProtect Smart offers the flexibility to increase the insurance cover at key life stages, without any medical tests, as follows:
a) Marriage: The life insured can increase the death benefit by 50% of the original death benefit, subject to a maximum additional amount of Rs. 50 lakhs
b) 1st childbirth / legal adoption: The life insured can increase the death benefit by 25% of the original death benefit, subject to a maximum additional amount of Rs. 25 lakhs
c) 2nd childbirth / legal adoption: The life insured can increase the death benefit by 25% of the original death benefit, subject to a maximum additional amount of Rs. 25 lakhs
7. Variants of the plan: Term insurance plans of some companies are offered in various variants giving flexibility to the person to choose the variants that suits their requirement. For example HDFC Life Click2Protect 3D Plus offers 9 variants to choose from. Some of these include:
Term 20 life insurance
a) Life: Basic plan that pays lumpsum sum assured on death.
All other variants cover this feature and some additional benefit.
b) 3D Life: Future premiums are waived off on diagnosis of any of the specified 34 critical illnesses
c) Extra life: Pays additional sum assured, if death happens due to accident
d) Income: Pays additional level / increasing monthly income
e) Return of premium: If life assured survives the plan tenure, then the premiums are returned
The above are some of the variants of the plan.
On our blog we have compared the claim settlement ratio of various insurance companies for the last 3 years. We have also compared the premiums and features of online term plans of 6 life insurance companies. We hope it helps you finalise the best term insurance plan that you are looking for. Check the blog article here