Among all life insurance plans, term life insurance plans are the most important. You have to pay a premium and you get cover (protection) for a fixed time period, called tenure of the term insurance plan.
If a policyholder dies within the term of the plan, nominees get the sum assured also called the death benefits. Nominees can pay back car loans and home loans with the death benefit. If you survive the term of the plan, you get nothing.
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Want to pick the best term insurance plan? Follow these tips.
STEP 1. Pick an insurer with a good claim settlement ratio
Before availing a term life insurance plan, check the claim settlement ratio of the life insurer. Claim settlement ratio gives the total number of death claims settled by the insurer.
Example: If a life insurer receives 1000 death claims and settles 980 claims, the claim settlement ratio is 98%. If the life insurer has a good claim settlement ratio, on an untimely death, the nominee’s claims are settled in a hassle-free manner.
Choose an insurer with a good claim settlement ratio.
STEP 2: Best term insurance plans offer rider benefits
Good term life insurance plans offer you rider benefits. This is an extra benefit offered, if you pay a slightly higher premium.
Popular riders are critical illness rider and the accidental death benefit rider.
If a policyholder avails an accidental death benefit rider, on an accidental death/mishap, the family gets an additional amount, usually twice the sum assured. Critical illness rider protects you from a financial loss on hospitalization, in case of a critical illness like heart attack or a stroke.
STEP 3: Good term insurance plans offer a higher policy term
Your term insurance plan must cover you across working life. Term insurance plans used to have a policy term of 25 years. Remember, best term life insurance plans offer a policy term of more than 30 years.
STEP 4: Best term insurance plans charge low premiums
Avail term life insurance plans which charge low premiums.
Remember: The term life insurance plans must offer good options and features.
STEP 5: Buy term insurance plans from older Insurers
Many citizens are comfortable with an insurer who is 10 years old. Life insurance is a long-term contract between you and the insurer. So some citizens say, older the better.
Remember: The final decision of deciding which term life insurance plan is the best, depends on you. The effectiveness of a term life insurance plan depends on the coverage, tenure and the goodwill/brand of the insurer and of course, the claim settlement ratio.
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