look news india
In today’s time, buying term insurance for financial security has become the first priority of every person. This is considered to be the most economical and best way to secure the future of the family. However, people often make small mistakes while purchasing it, which can lead to huge losses at the time of claim. If you are also planning to take a term plan, then do not ignore these important things. Only insurance taken with the right strategy and complete information can prove to be a protective shield for your family.
How to choose the right Sum Assured
The biggest question while taking term insurance is what should be the sum assured. According to financial experts, your sum insured should be at least 15 to 20 times your annual income. Additionally, you should keep in mind your future expenses like children’s higher education, their marriage, home loan and other long-term financial goals of the family. If you choose a plan with a low sum assured, then in times of inflation that amount may fall short to meet the needs of your family. Therefore, take a decision only after properly assessing your current income and liabilities.
Never hide medical history and personal details while taking a policy.
Hiding information related to your health and lifestyle while taking a policy from insurance companies can prove to be the biggest mistake. Many people do not inform the agent or the company about their smoking, drinking habits or chronic diseases in order to reduce the premium cost. Insurance companies easily accept the forms while selling the policy, but when the family applies for a claim, the company scrutinizes the documents in depth. If any historical fact is found hidden during the medical examination, then the company can reject the claim outright. Therefore, while filling the form, give every information absolutely true and clear.
Make your plan even stronger by adding riders
Instead of just buying a basic term plan, you should add riders or additional benefits as per your needs. Critical Illness Rider, Accidental Death Benefit Rider and Waiver of Premium Rider are options that come in handy in difficult times. For example, if a critical illness occurs during the policy term, you get separate financial assistance under the Critical Illness Rider. Although adding these riders increases the premium slightly, in case of an emergency this investment proves to be extremely beneficial for you and your family and protects you from major financial crises in the future.
Claim Settlement Ratio and Company Reliability
Before buying term insurance from any insurance company, you must check the claim settlement ratio i.e. CSR of that company. A company whose CSR is 97 percent or more is considered very trustworthy. This means that the company has successfully paid the claims of its customers. Additionally, also look at the solvency ratio of the company which reflects its financial health. Do not buy insurance from a new or small company which does not have a good track record in the market just for the lure of low premium, because term insurance is a long-term commitment.
Read the policy terms and exclusions carefully
Most people trust the agent’s words and sign the policy documents without reading them, which later causes huge losses. Every insurance policy has certain rules under which the company does not pay the claim, which are called exclusions. This may include situations like suicide, accidents during certain adventure sports or war. Apart from this, also be fully aware about the rules and free-look period for the first few years of the policy. If you do not understand the terms of the policy, take help from a financial advisor so that you do not face any problems in future.