Life insurance is for everyone who wants one. With the array of plan options available, it may be difficult to not find a plan that offers the features and benefits you need. For someone who wants a simple insurance plan at the lowest costs possible, term insurance may be one of the best choices.
If you are looking to buy a term plan, it is essential to know that there is more than one sub-type. When most people talk about term policies, they are usually referring to level term insurance, which is one of the most basic forms. When trying to figure out which plan suits you best, you can start by assessing your needs. With easy access to online term insurance calculators, you can make more precise estimates and choose better.
Here are some factors in a term plan that you should look at when buying a new policy.
- Premiums
Whether you choose a single premium or a regular premium, it is important that you are able to bear this cost comfortably. Premiums are the expense that the consumer pays to maintain the plan. The amount of this premium is decided on the basis of the sum assured chosen. A term insurance premium calculator can help you get an idea of how much premium you may have to pay for the sum assured of your level term insurance plan.
- Sum Assured
This is the amount that your nominee may receive as a death benefit. Instead of choosing this amount arbitrarily, give careful thought to what you may want to leave behind for your loved ones. This could be an amount that is 10x your annual income, or it may be enough to cover their expenses, and any liabilities you leave behind for the next few years. Once you have this amount, use an online term insurance premium calculator to see whether the premium at your chosen frequency is affordable to you.
- Riders & Benefits
Riders are optional add-ons, while benefits are built-in features. The availability of riders and benefits may vary across term plans. In some cases, your riders and benefits may affect your premium. It is advisable to visit the relevant term plan calculator for your shortlisted plan and check whether the range of benefits offered is reflected in the premium amount.
- Policy Tenure
This refers to the duration of the life cover offered by the term plan. This is a crucial aspect of the policy, and it may affect other aspects as well. If you believe that your term life policy will suffice you for the rest of your life, you may like to choose a longer duration. Term plans usually offer life covers of up to 65-70 years of age. To understand how your tenure affects your sum assured and premium, you may check varying policy durations in the term insurance calculator.
- Claim Settlement Ratio
Claim settlement ratio is the number (in percentage) that is reflective of the company’s success in settling its death claims. The total number of death claims settled by the company against the total number of death claims received annually is how the ratio is calculated. A company with a ratio of over 90% has a favourable history of death benefits issued.
- Solvency Ratio
Another number to know about an insurer is the solvency ratio. This is the ratio of the insurance provider’s assets and liabilities. If the solvency ratio is high, it means that there are assets that support their liabilities, thus making it safer for you to access your benefits.
These are some of the fundamental factors that may help you with choosing the best term life plan. Once you have chalked out your expectations, look for these factors and shortlist plans based on them. It is best to use online term plan calculators so that you can be fully prepared when buying a plan and make a confident online purchase.
