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How to Choose The Best Term Insurance for Yourself

By Finserv MARKETS - Oct 22,2021
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How To Choose The Best Term Insurance For Yourself

What is Term Insurance?

With term insurance, you make regular, defined premium payments to an insurance company. In return, depending on the policy conditions, the insurance company makes the payment of a predefined, lump-sum amount known as the sum assured, to your family or financial dependents, in the unfortunate event of your unexpected death. By buying a term insurance policy, you can help your family withstand your loss of income, continue their lifestyle, and pay off any financial debts or obligations in your absence.

How to analyse the best Term insurance plan?

  • When you think of buying a life insurance policy, considering a Term Insurance plan is the best bet as it usually involves smaller annual premium payments.
  • It is advised that you start your term insurance policy at the beginning of your professional career considering that policy premiums are directly tied up to your age. It is important to note that premiums are lower when you are 30 and almost double when you are 40 years old or more.
  • Buying term insurance policies online through tech platforms like Finserv MARKETS, that let you choose from a variety of insurance providers, rather than purchasing them off-line is always better. This way, you incur lower charges and get at least a 5% discount. You also get a longer duration to review your policy conditions and confirm that you have bought the right policy.
  • Evaluating your stage in your life cycle, the number of your financial dependents, liabilities, and the assets you own before deciding your coverage amount is highly recommended. Also, factoring in inflation to ensure that your family has adequate cover is always better.
  • When comparing different plans, doing a cost-benefit analysis is a must to factor in the total premiums and the term and the coverage you buy for it. Also, consider whether the sum assured to be paid out by the insurance warrants the premium payments and the policy term.
  • Before buying a policy, checking the claim settlement ratios of the different institutions is advisable. You can calculate the claim settlement ratio by dividing the total claims checked / total claims filed. The higher the claim settlement ratio, the better the expected service from that insurance company. With Finserv MARKETS, you can do a comparative analysis of this ratio online and select the best option for you.
  • You can also check the Term Insurance policy for riders like premium waivers. In addition to standard clauses, you should also evaluate the different ‘bells and whistles’ where you pay small, additional premiums. Riders could include disability cover, loss of employment cover, and accident cover, which lead to premium waiver without any change in the final payment. You or your family are fully protected if an undesirable event happens, with premium waivers.
  • You can also buy an increasing Term Insurance plan, in which, as your salary increases, your premium payments also increase, and you can better protect your family.
  • Buying Term insurance should not be viewed in isolation. Term insurance is also a financial investment, making your policy a part of all your assets and liabilities.

Key Takeaways

Buying Term Insurance should be one of the cornerstones of your investment planning. Using your business acumen to do a comparative analysis and choosing the best plan which works for your particular circumstances is essential. With a small Term insurance premium payment on the Finserv MARKETS, you can save your family from financial distress in the untimely event of your death.

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Bajaj Finserv Direct Limited ("BFDL") is primarily engaged in distribution of financial products and services through its digital platform (“Bajaj Finserv MARKETS”) and inter alia renders services of customer acquisition, providing preliminary credit support activities, fulfilment services and post-acquisition customer services to Banks, NBFCs, HFCs. BFDL is also a registered Corporate Agent (Composite) under valid IRDAI registration number: CA0551 valid till 10-Apr-2024 for solicitation and servicing of Insurance Products. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522