Here's why the Cheapest Term Insurance May Not Always Be the Best
The term insurance plan is the most basic type of life insurance policy that ensures the financial security and stability of your dependents at a very low cost. When it comes to purchasing a term plan, most of the people want to opt for the cheapest term plan in order to save their money.
This type of insurance policy does not offer survival benefits, so why to avail costly term plan? Well, this is the main thinking that people usually have about the term plan. However, the cheapest rates should not always be the main criteria for deciding which term plan to opt for.
What if you buy the cheapest term insurance from the insurer that has a very poor claim settlement ratio and rejects the claim? Or What if the insurance company from which you have brought the cheapest term plan shuts down or meet with any difficulties? Will it solve your main purpose of buying a term plan? The answer is NO. That is why it is imperative to buy the best plan that suits your needs as well as the budget.
Apart from considering the price, there are five other parameters that you should also consider to buy the best term plan to protect your loved ones in any eventuality.
Usually, the insurer provides a maximum maturity age from 70 to 80 years. As your age increases, you become more susceptible to diseases therefore higher your maturity age; the better will be the usage of term insurance plan.
Higher Policy Tenure
Term insurance policy tenure used to be 20-25 years in past days. However, the scenario has been changed now. Insurance companies are now offering policy tenure of 30-40 years in the UAE. With a rise in the life expectancy ratio, it is beneficial for you to buy a term plan with higher policy tenure and protect yourself from the hassle of purchasing another term plan in case the expiry of your first term insurance.
Claim Rejection Ratio
This is one of the most important factors that need to be examined before buying the term insurance plan. And insurance company may be providing the cheapest term insurance but what if it rejects 50 percent of the insurance claims? In such a case, the money that you have paid over the years for a term plan may be down the drain. In addition to this, your beneficiary(s) will experience a lot of financial stress.
That is why it is quite essential to opt for a term plan from the insurance company with a strong financial background & reliable in terms of claim settlement. Don’t forget to keep an eye on the claim rejection ratio since it shows that the number of claims that have been rejected by the insurance company.
The premium cost that is quoted online or via charts is just a suggestive premium amount. But remember, the actual cost of your premium may increase once your health tests disclose the health condition of the policy buyer. Also, a person who is smoker would certainly have to pay 25-20 percent more for premium. Therefore, it is important to consider the actual premium cost before buying the term insurance plan.
Claim Pending Ratio
There are several insurance companies in the market that have a high list of pending claims that simply shows an insurer’s inefficiency in settling insurance claims. Ideally, all claims must be settled within a time frame of 6 months. So, check the past record of the insurance company before opting for a term insurance plan.
The Final Words
The term insurance plan is meant to be securing your dependents financially when you are gone. That is why your aim should not only opt for the cheapest term plan but also find the best term insurance plan that assured fast claim settlement at the time of need so that your loved ones are not left in the lurch.