Selecting an Insurance plan is one of the most important things to do for a secure future for our family and ourselves. However, the thousands of options available in the market offered by hundreds of companies and among tens of types of plans, it can be a tedious task. Widely selected plans among the many options are the Term Insurance Plans.
A term Insurance plan is a plan that is for a specific period, and in case of death of the insured during that period, the beneficiary gets the insurance payment. However, if the insured outlives the policy, nothing is received. Hence, you only get the death benefit, not cash/survival benefit.
Once you know what exactly it is, the primary question arises is, how to evaluate a plan and identify the best plan for you? Here are some tips to keep in mind while selecting the right insurance plan for you and your family.
- Look at your Life Needs: Before going in to buy a plan, you must be clear about what exactly do you expect from the plan and what stage of life you are in. Some of the questions to answer while analysing your needs.
- Which stage of life are you currently in? [started earning, married, have kids ]
- What do you expect from the plan? [to cover your spouse after your death, help pay for the old age expenses, help pay for or support your children]
- What is your current income and that of your family?
- Based on your family’s lifestyle, how much will be needed to maintain that in the future?
- How many family members do you want the plan to cover?
- What is your current health position? Do you have any diseases?
- Does any illness like diabetes run in your family and can be inherited?
- Determining the cover amount: Once you have answered the questions above, you should be able to safely determine the approximate amount of cover you are looking for. Keep in mind that this cover amount will be for your entire family and not just yourself.
- Tenure: Once the amount has been determined, you must also know approximately after how long you need the cover. It may be all at once after 20-30 years, some monthly payments or any other options.
- Premium Payments: One of the most important aspects of any policy we look at. Premiums play an important role in our decision-making process. Knowing your payment capacity based on your income is the key to this decision. One thing to remember is that the earlier in life you take a term life insurance policy the lower will be the premium amount. So, it is better to invest in insurance policies as soon as you start having a steady stream of income.
- Health Risks: Assessing personal health risks and those that can be inherited from lineage is essential to analyse the risk cover that is needed. Hence, disclosing such aspects to the company or agent will help them in providing you with better options that offer better coverage.
- Riders: Many term plans offer additional coverage in the form of riders. Riders may include various covers like a disability cover, loss of employment cover and much more depending on the company. They add considerable value to the basic term plan purchased.
- Company: The next important thing is figuring out whom to trust with such a thing. One significant way to look at the credibility of the company is to look at their Adherence Rate, Claim Settlement and Ratings.
If you follow these steps, analyse every aspect of the list given above, you are likely to select the best option available for you. The base of a good investment is gathering all the knowledge and using it well to make decisions. This process may take a while, but it will undoubtedly be worth it.
Byron Simpson is a qualified business/finance writer expert in investment, debt, credit cards, Passive income, financial updates. He advises in his blog finance cent.