How To Choose The Right Sum Assured Under A Term Plan

Savings and investments are essential aspects of life. In this uncertain world, the certain thing that happens even after your demise is the term insurance plan. But choosing the best one that suits you will always confuse you. Plenty of term insurance plans are available on various sites and from banks, and insurance agencies.

Term Insurance Plan

A term insurance plan is a type of policy that offers coverage for a specific period. In the term insurance plan, your nominee will receive the sum after your demise. The term insurance can be with or without tax benefits. In case of an emergency, you can withdraw the term insurance plan as it is. 

Unlike other insurance plans, term life insurance is cheap. You should choose the insurance plan according to your affordability. The term insurance is not only for you but also for your family to lead a peaceful life. Protect your family with higher coverage at a low premium rate. But what to choose is essential. 

This article gives insights into how and what to consider while choosing the best term plan. 

Types of term life insurance 

The ‘term’ is fixed, and you can buy the procedure for that period alone. If you are paying a higher premium, the sum assured to the nominee can reach INR 1 Crore. Although purest, there are certain types of term insurance policies:

1. Level Term Plans
2. Increasing Term Insurance
3. Decreasing term Insurance
4. Return of Premium Term Insurance
5. Convertible Term Plans

Choosing the best term life insurance plan offering the required sum assured

Firstly, before considering which term insurance plan to choose, you must look at which insurer to determine. You should follow the below steps to pick the right one.

1. CSR or the Claim Settlement Ratio: Check how well the insurer pays the claims of a term life insurance policy. This tells you the probability of your claim being accepted. A ratio of 1 is ideal. Having the balance as one means all the claim applications received are accepted.
2. Your Profitability: Compare the premium to be paid and the sum assured by various insurers. Some plans have a higher premium but also a higher sum assured. Some insurers provide the same premium but offer a high sum assured than others. Therefore, choosing the best insurance company that gives sum assured and the other benefits should be shortlisted.
3. Health and Medical guidelines: Check with the insurer for which the claim will be accepted. And then, you need to consider the one who has minor requirements or objections.  
4. The pace of file movement: All insurance providers have a separate process for filing claims. Go through the procedures to file a claim for your term insurance plan. You can also check how quickly the sum assured is released to the nominee. This makes you tension free as you are sure your nominee will have to undergo less paperwork.
5. Customer Support: Even the best term life insurance providers have inadequate customer support. Know about the customer support provided to the nominee to help with all the doubts.
   After choosing the insurer, it is on you to determine the plan best for you and your family. You must keep in mind that you need to consider all the factors to finalize the insurance plan.
6. Be a Futurist: Prepare detailed data of your future income and plan on how much premium you can afford. A low premium might cost you in the long run. Based on your family’s financial needs and average income, pick the bonus that offers a hefty sum. Retirement is imminent. Therefore, it is better to consider the age factor when you choose to secure your family’s future.
7. Planner: Plan your expenditure and figure out the savings you have every month. Based on this, come out with an annual premium you can afford for the term insurance policy. Planning will come in handy with your needs.
8. Milestones: Life is a journey with certain milestones at different phases. It’s better to plan your sum assured considering the significant stages of your life.
9. Income, Expenditure, Assets, and Liabilities: To choose the best term life insurance plan, you should have a detailed calculation of your assets, source of income, liabilities, and expenditures. Some companies like Piramal Finance provide a comprehensive analysis based on your input. You can reach them out for free.

With the above tips, you can now decide the best term life insurance policy to suit your financial conditions. Having term insurance is like having support. Ask for the tax benefits and consider them while applying for the life insurance policy.

In case of any doubt, consult a financial expert like Piramal Finance and get easy and customised term insurance, credit score and personal loan solutions. We offer you accurate information on banking and financial services to ensure your financial knowledge is up to date on essential services and products. Visit us now!