How to choose the right plan and what things should be kept in mind?

Since the Covid pandemic, people have become more aware of insurance plans. The demand for plans like life insurance, health insurance and term insurance has increased rapidly. Today we will discuss term insurance. This scheme provides financial security to the family of a person in case of untimely demise. But the question is, which term insurance to choose and what things to keep in mind? Let us understand these aspects in detail.

1. Understand your needs

Whenever you consider buying term insurance, first assess your needs.

• Think about how much financial support the family will need in your absence.
• If you are buying a term plan for 20 years, estimate the amount required by keeping the inflation rate in mind.
• If you have responsibilities like home loan, personal loan, or children’s education, choose a plan combining all these.
• Many companies offer free calculators and consulting services that you can turn to for assistance.

2. Share the right information

Honesty is very important while buying insurance.

• Avoid hiding information related to your habits or health.
• For example, if you smoke, please inform about it.
  • This may increase the premium slightly, but it will ensure that your family does not face any hurdles in getting the claim.
• Insurance companies apply strict scrutiny in the claims process, so incorrect information may result in your claim being rejected.

3. Which company’s plan to choose?

Consider the following when making this decision:

• Company Credibility and Experience:
  • See how many years the company has been working in this field and how big is its business size.
  • Avoid companies with small businesses as there is no guarantee of their long-term stability.
• Settlement Ratio:
  • The claim settlement percentage of the company should be 98% or more.
  • This information is available on IRDAI website.
• Settlement Amount:
  • See what amount is given by the company for settlement.

4. Use riders correctly

Don’t ignore riders when buying term insurance.

• For example, choose riders with critical illness, accidental death or disability cover.
• Make sure that these riders are not added to the basic sum insured.
  • For example, if Rs 30 lakh is already deducted for critical illness cover in a Rs 1 crore plan, your family will get only Rs 70 lakh.
• Buy the plan only after clarifying all these points.

5. Don’t buy term insurance for returns

The main objective of term insurance is to provide financial security to the family in difficult circumstances.

• It would be wrong to buy it from the return point of view.
• Plans that give returns are expensive and may prove to be less beneficial in the long term.
• So, consider this only as a security plan.