we are investing in or purchasing a financial instrument, a lot of things are
hovering in our minds. We do in depth study about the same and compare Term plan
against the plans of other companies. Similarly when we take a loan, we compare
interest rates of various banks and lenders when we apply for loan, similarly
we compare rate of returns of various investment schemes when we plan to invest
our money. Buying a term is no different; you need to analyze how much cover
you need to replace your income after paying off your liabilities and then
compare Premium of various companies.
any other investment scheme or financial instrument the amount payable i.e. the
premium is not the only thing you should ponder upon. There are many other
factors that you should consider like, the term of the policy, Claim settlement
ratio (CSR) of the company and its market reputation. You buy a term plan so
that your family does not suffer financially if unfortunately something happens
to you. Thus, you should buy from a company having a good reputation of
settling claims without complications and tantrums. To access this one needs to
compare the claim settlement ratio i.e. the number of claims the insurance
company settles out the total number of claims registered with it during the
year. The CSR closest to 100% is best, considering that you won’t be around to
get the claim from the company, the claim process should be very easy and
convenient for your family to recover the money. Complex claim process might
discourage them and they may feel harassed. It is very likely that they may be
going through a lot of emotional stress from your death. In that scenario you
won’t want them to struggle getting the claims.
important thing is to compare the term or duration the company is providing. It
is always advisable to go for the maximum term. Your earning life i.e. life
prior to retirement should be covered as till then there would be loss of
income from your death, post retirement there would be no such loss. If you are
in business or profession where there is no defined retirement age, you should
go for the maximum term you can get to increase the chances of your family
getting the claim.
we are choosing a term plan there cannot be one best product for every person
as each of us differ in our needs and preferences. Some people are comfortable
with paying annual premium; some are better paying a monthly, quarterly or semi-annual
premium. Thus, on the companies that offer them premium paying mode of their
choice is the best for them.
the payout of companies differ, some companies pay a lump-sum whereas others
pay periodically. There are companies that provide option for both. If you
think your dependents are mature and can manage a lump-sum amount without
carelessly spending it, then you can go for lump sum option or else periodic is
better for you.
you may know that term plans are highly customizable. There are many extra
features called Riders that you can add to your term plan to enhance its
utility and Coverage by paying a little extra on premium. You may sit with your
agent or study these riders online to assess what all riders suit your life
requirements. You can compare companies on whether they provide the rider you
are looking for. Attaching such riders you can strengthen your term plan so
that it best serves your requirement at the minimum price possible.