How to Pick the Right Term Insurance Policy for You?

As surprising as it may sound, most of us delay planning for our future lives, especially for the eventsthat bank on the eventuality of death. Future planning is often talked-about and yet ends up in procrastination. As life advances, families grow, and so do responsibilities, leaving no option but to be 100% sure ofyour family’s financial security. Having a robust back-up plan is always a good option, and one of the best financial decisions you can create right now is to get yourself insured for life with term insurance.

Term insurance is available in different variants and can be used for various benefits in addition to life cover. For example, the market bearers have introduced a new product, ULIPs, that is a combination of insurance and mutual funds. This has provided with multiple options to people who resort to insurance not just as a life cover but also as a mode of investment. Term insurance can be also be used as a tax-saving tool. Simply put, a basic insurance policy can be modified and enhanced to serve as a return generating investment and a life cover that comes with tax deductions under Section 80C. The right term plan serves the needs of your family and helps them sustain a dignified life in your absence.

The next question that arises is how to pick the right term plan for yourself. There are several factors that influence this choice and must be considered before picking the final product.

Here’s what you must check while picking up the right term plan

  1. Required cover amount: When planning to buy an online term plan, the first thing to consider is to assess the required amount of cover that your family will need in your absence. This may involve pending debts, liabilities, expenses, and monthly incomes. This combined factor is called Human Life Value. Simply put, Human Life Value is the insurance cover that is considered equivalent to the needs of your family in your absence.
  1. Type of term insurance: A term plan is available in four different variants in India that are subject to the premium amount. Here are the 4 types:
  • Monthly income plan: Under the monthly income plan, the sum assured is paid on a monthly basis to the dependents so that they can take care of the monthly expenses.
  • Level term plan: This is the basic or regular term insurance plan wherein the premium amount remains fixed all along with the life of the policy.
  • Increasing term plan: Under this plan, the sum assured increases every year at a predetermined percentage that helps to meet the increasing needs and to combat inflation.
  • Decreasing term plan: Decreasing term plan is generally taken in terms of loan repayment wherein the total amount of sum assured keeps decreasing at an annual predetermined rate.
  1. Insurance premium: The term insurance premium is an important factor that needs to be considered while choosing a plan. The premium amount can differ based on the type of plan you choose. Buying anonline term plan can make it easier to determine the right premium as you can compare premiumsacross different companies.
  2. Riders or Add-ons: A rider is an add-on facility to the original policy. For example, there are riders for critical illnesses, accidents, disability caused by accidents, and more. A rider comes with an extra premium amount to be paid over and above the basic policy premium.

Conclusion

Aterm insurance plan will not only offer financial support to your loved ones in your absence but will also bring you tax and investments benefits. Keeping in mind the needs of your family and the above-mentioned points, you can compare and pick a suitable term plan online.

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