A term insurance policy is a protection plan that offers death benefits on the policy holder’s demise. It is the simplest form of insurance that shields your family against the financial crisis when you can no longer be with them. You might be puzzled by the plethora of choices available when it comes to purchasing a term plan. Here are some strategies that can help to get the right term plan to suit your family’s requirements.
Select the ‘right’sum assured and not a ‘low’ sum assured
The rule of thumb, according to industry experts, is that for term policy of 25 years, the cover needs to be 250 times the yearly expenses.
While picking a plan, take into consideration your outstanding liabilities to enable your family to cope with any debts. You can calculate the increased costs of inflation by takingyour family’s yearly expenses without loan instalments and multiplying it by ten times the number of years of the chosen tenure. A sum that is three times your annual income can be helpful to cover future financial goals like the education of children. The total of all these figures will help you decide the appropriate cover for securing your family’s future.
Bear in mind that the right time to buy a term plan is now
Do not delay purchasing a term insurance policy. With increasing age, you may acquire critical lifestyle disorders. The coupled effect could result in an increased premium. To get the best deals, opt for a term plan at a young age. You can always choose a policy that offers flexible coverage so that you can adjust the sum assured with your changing needs at a later stage in life.
Avoid falling for marketing gimmicks
When advertisements promote a plan with cost per day declarations, it is sure to catch your attention. It happens because of the seemingly low price as compared to other plans displaying the annual premium. However, if you calculate, you may often find that the former is costing you more than a yearly plan. Avoid unnecessary expenditures by staying clear of such promotional ploys.
Declare all your preexisting diseases and health history
Remember not to be tempted into hiding your medical history and smoking or drinking habits by the lure of a lower premium. Hiding vital information is tantamount to breaching the contract. It might lead to the cancellation of claims later.
Take a plan that offers income replacement options
Most term insurance plans provide riders like a critical illness cover. Choosing a plan with a large rider payout can help meet the cost of medical care and act as a replacement for your income. Look for a waiver of premium and other offers while you select add-ons for your term insurance policy.
Think about splitting the coverage
Life cover requirements vary with age. Your liabilities increase after you get married, have kids, or when you takea loan. After your retirement, you are likely to have accrued some assets, while the number of dependants on you decreases. Your life insurance needs also start reducing. Earnings stop, yet you have to keep paying premiums. For this reason, you can split the amount of coverage into two policies of different durations. One plan can drop once you reach your retirement age, while you continue with the other policy. Portioning the coverage helps in maintaining the total premium and is lower than paying for the complete coverage in one go.
It is advisable to carry out your research yourself instead of taking the advice of third parties who may have stakes in their suggested plans. These days, you can not only compare deals but also make insurance purchases online.
Buy term plan online and secure the financial future of your family from the comfort of your home.