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A Complete Guideline for Choosing the Right Term Insurance


“Death is not the greatest loss in life. The greatest loss is what dies inside us while we live” ~ Norman Cousins.

So, get rid of your greatest fear what will happen to your family if you have an early death by securing their financial future with a ‘Term Insurance’ plan. Term Insurance is the most traditional form of life insurance wherein the insured gets a full coverage for a defined period of time, and if the insured dies within the policy term then his or her beneficiary gets the death benefit. Most term policies offer a variety of plans tailored to fit a particular situation. Moreover, it comes with the lowest premiums as compared to other forms of Life Insurance like Endowment, Money Back Policy, and Unit-linked Insurance Plan.

Now, let’s take a look at a step by step guide for choosing the right term insurance in accordance with your financial goals.

I want a traditional form, no frills along with it: If you want a simple term insurance plan with no extra toppings, then opt for a plan that comes with single premium options and offers the assured lump sum amount to your family after your death. The policy’s sum assured should be at least fifteen to twenty times to your present annual income.

Accident cover would be a better deal: If you are willing to walk an extra mile, then go for an Accidental Death Benefit plan. It will cover a large benefit at a minimum cost and protect you against a range of uncertainties such as road accidents; and also offer stretched-out benefits to your family in addition to the assured lump sum amount.

Want to be insured against a critical illness of any family members? Contrary to health insurance that only compensates your hospital bills based on actuals and does not even cover critical illness such as cancer, Term Insurance can provide you with coverage against critical diseases. How? Just ride on a Critical Illness plan on a term policy and get financial protection against the illness of your family member.

I should be able to choose how I receive the pay-out: Having recognized the fact that on receiving a lump sum amount at one go the insured can spend the money in a reckless way and end up having a financial disaster, some insurers have started giving out multiple pay-out options to the policy holders. So, before you zero down on a term insurance plan, look for an insurer that offers the flexibility of choosing pay-out options according to your priority.

Want family to have a fixed monthly income after my death: Nothing can be more ideal than your family to be able to continue having fixed monthly income even after your death. Isn’t it? There’s some term insurance plan wherein your family can receive a fixed amount every month as monthly income in addition to a portion of sum assured. This will enable them to maintain a lifestyle that they are used to even after your death. However, just make sure that this income is tax free.

I want to choose the best insurer: Now, this is a task when all the insurers in the market promise to provide you and your family with the best possible financial security and protection no matter what happens. Check the background and research well to ensuring that the insurer you choose has the credibility and integrity to be to fulfill the promises. Look at their Claim Settlement Ratio as announced by IRDAI and consider corporate governance record, solvency ratio, and assets under management (AUM) for determining the best insurer.

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