Term Insurance Plans

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All about Comparing a Term Plan

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A Term plan is plain vanilla insurance product. It is an ideal product for those who are seeking pure Risk cover against death at the lowest cost.

If you are contemplating buying a Term Insurance you should be aware that not all term plans are the same. Term plans vary from each other in several aspects. Before you choose one for yourself, make sure to have compared all term insurance plans. It is common to see people getting lured by the low premiums and buying any term plan. They only realize later that their chosen term plan does not really provide adequate cover for their needs.

The insurance sector in India is very competitive and companies have tailored term plans to suit to the varied requirement of people. So before you buy one, make sure you compare and buy the one that most closely fits to your requirement.

How to compare term plans

You need to compare term plans on the following three aspects.

1. Tenure of the Policy

If you are quite young when you buy your term plan, it is advised that you buy a plan that offers the longest tenure. The risk of death increases proportionally as you get older. Since the Premium of the term plan remains the same throughout the tenure of the plan, your life would be covered at the same premium when you get older and the risk is higher. Hence, when you buy a term plan even before you compare the premium, compare the tenure.

2. Claim Settlement Track Record

The claim settlement track record tells you the probability of your Dependants receiving the promised sum Assured in case you were to meet with an unfortunate early death during the tenure of the term plan. If you are buying a term plan do make it a point to compare the claim settlement ratio. It is best to avoid buying a term plan from a company which has a dismal claim settlement ratio. Rather than limiting your choice to the one with the best claim settlement track record, it is better to target a minimum claim settlement ratio. I think you should avoid buying from a company that has a track record of settling less than 90 percent claims.

3. Premium of the Policy

Finally, when you have short-listed policies that offer just the right tenure and has a decent claim settlement track record you should start hunting for a bargain. You can do an online comparison of the premium rates and choose the one that offers you life cover at lowest cost.