The decision to buy term insurance is a critical one. In addition to providing a lump sum, this program takes care of your loved ones’ dreams. You’re assured of life through regular premium payments on a term insurance policy. A life insurance provides financial stability to your dependents if you die unexpectedly and pay off any debts left behind.
You could, however, put your family in financial hardship in your absence if you are not cautious when you are selecting the term insurance policy. Here are some things to consider when purchasing term insurance.
- Obtain adequate insurance coverage: The amount of coverage you choose is one of the most crucial decisions. Many people choose a number that seems to be adequate, such as Rs. 1 crore. This is a mistake you should avoid. The coverage you need should cover all your liabilities, the family’s living costs for at least 30 years, as well as your future goals.
- Don’t omit any information: You’ve probably heard and understood that you shouldn’t lie to your doctor or lawyer, right? The same goes for your insurer. To save on the extra premiums, do not hide details such as smoking or drinking. As a result, you are breaking a contract with the company, and subsequently, your request will be rejected. Therefore, you should correctly complete the policy forms and even verify them before you submit them. Provide details about any health issues you have had or are currently dealing with, as well as your family’s medical history, if any.
- Name the nominee always: When you submit the proposal form, you must include the name of the nominee. In the ideal scenario, your spouse or children can be nominated to be beneficiaries of the term insurance Moreover, if you take out a policy under the MWP Act, your children and wife will inherit the sum assured. Married men may use this law to ensure that their insurance policies benefit their children/wives only. In your absence, only the nominee will receive the funds.
- Know all your service options: Make sure you are aware of the company’s service touchpoints. In addition to checking the number of branches, the number of mobile applications, and other similar factors, check the company’s digital platforms. You can use these details to get convenient service at a later date.
- Policy Period: Next, you will need to choose the period of the policy. The maximum available policy period should be selected when buying the policy at an early age. Consequently, the policy will have relatively lower premiums throughout its term.
- Insurance Provider Record: In addition to vintage, client reviews, claim settlements, and financial strength, one should also pay attention to a company’s customer-centricity in terms of the sales process, service, and payment options.
- Buying Age: Most dependents would already have become financially independent by the time a person reaches retirement age, so it makes no sense to buy an insurance policy beyond that point. At an early age in life, premiums for insurance policies are typically lower than at a later age.
- Disclosure of all existing policies: Before purchasing a new term insurance policy, it’s vital to disclose all the details of your existing insurance policies. It is observed that people often neglect to mention this information in the proposal form due to the difficulty of retrieving the information through old documents. Sometimes, however, hiding these details can lead to a claim being rejected.
- Premium Amount: When buying a term plan, keep this in mind. If the sum assured is higher, the premiums will be higher. First, you need to check your ability. Even if you feel comfortable paying the premium you choose today, the future can be unpredictable. As a result, you could be unable to pay a large premium at any point during your life.
- Payout options: It is possible to choose between a lump sum payout or a regular monthly payment. It is important to choose a flexible payment option to meet your financial feasibility.
Your financial portfolio would be richer if you invested in term insurance. Your family will receive financial aid from this and be able to fund their future goals. As long as you keep these points in mind, you can provide life and security to your loved ones even in your absence.