6 Tips to Choose the Best Term Insurance Plan

To help you make a better decision below mentioned are six tips that will help you choose the best term insurance plan for you.

Think About the Stage of Your Life and Number of Family Members When Deciding the Cover Amount

The family members that depend on you, changes with the stage of your life. The financial responsibilities of an individual who is single are different from those of an individual who is married or an individual who is married and has kids.

The coverage of the best term insurance plan should be chosen as per your responsibilities. It is also important to keep a lookout for the future and plan for the situations in which your financial responsibilities may increase.

Keep in Mind the Amount Your Family Will Need to Maintain Their Current Lifestyle

The extent of the cover along with the dependents largely depends on the current lifestyle of your family members. You should always plan for the amount of your term plan coverage that is enough to sustain the current lifestyle of your family members in order to get the best term insurance plan. This amount should also factor in inflation.

Coverage Should Be Determined as per Your Family’s Needs and Not Just Your Income

Whether you are the sole source of income for your family or a contributing member to the collective income, you should always opt for a cover amount that is equivalent to the amount of income that will be sufficient to sustain the everyday spending of your family members.

Any Existing Liabilities Should Be Added to the Coverage

People who earn are often under the stress of existing liabilities such as personal loans, short term loans, car loans, or home loans. To save the burden of the repayment falling on your family members, it is important to include the amount that is repayable to the outstanding debts in the best term insurance plan coverage.  

It is better To Have a Higher Claim Settlement Ratio

A claim settlement ratio is a value representing the numbers of claims settled by the insurance company against the number of claims filed. In order to live up to the commitment of offering monetary reimbursement, the company providing the best term insurance plan for you must have an effective claim settlement rate.

The higher the claim settlement ratio, the higher are the chances of getting the entire assured sum of money. If the company you choose does not have a high settlement ratio, there will be a lot of problems faced at the time of filing the claim.

You should be aware of the Riders that Maximize Your Coverage

The best term insurance plan apart from death benefit also offers additional coverage in the form of riders. There are a variety of riders such as:

• Loss of employment cover
• Disability cover
• Waiver for premium cover

These additional covers or riders can be added to your term plan by paying a small amount of additional premium. These riders add significant value to your basic term insurance plan.

The Bottom Line

It is important to do your research on the company’s background thoroughly before opting for any term insurance policy. Many companies do not settle the claims on time, which could lead to financial trouble in the future. It is also important to get your term plan from a reputable company.

You should always ask your friends and family regarding the kind of policy they hold, the additional riders they have opted for, and the insurance provider they are dealing with, this helps in getting a fair idea regarding the term policy and the insurance provider. However, it is also important to know that what may work for your known ones, may not work for you. So it is important to be clear about your needs and requirements.