Buying the Right Term Plan!

With 24 Life Insurance Companies in India, it often becomes difficult for individuals to choose the best or shall I say the right Term Plan for themselves.

People have been buying Term Plan by looking at various factors. Some buy it solely on the basis of low Premium some buy it based upon the company while some would look at the Claim settlement Ratio before buying a Term Plan.

We have created a list of all parameters you should consider before buying your Term Plan. We are not getting into too many technicalities and trying to keep it simple:

 

  1. Insurer’s Claim Settlement Ratio: It is very important to check how much claim the Insurance company is settling year on year. Yes, not just for last year but over the last couple of years. Claim Settlement ratio means how much claims, the Insurance company has cleared/settled/paid against the claims made. Higher the Claim Settlement Ratio, better it is for the Insured.
  2. Term Plan Premium: Though Term Plan Premium shouldn’t be the only reason to buy a Term Plan but its surely a reason which also should not be ignored, until & unless you have too much money to spend & you don’t care. With limited income, existing Insurance & EMI liabilities & rising household expenditure, we feel it is very important that you save whatever best you can without compromising on a good product.
  3. Brand Trustworthiness & Lineage: How strong the Insurance company’s Brand is and since how long they have been in the Insurance Business is also an equally important factor while considering Term Plan options. Stronger & Older the Insurance company, less likely is its chances to be bought over by another Insurance company. Also if possible, know the focus of Insurance companies. Not all Insurance companies focus on Term Plans. It is advisable to buy the Term Plan from a company whose focus is on Term Plans.
  4. Product Features: If you have options two Term Plan options to choose from, one a standard Term Plan product & the other with inbuilt features by paying a marginal amount, our advice is to analyse the feature benefits & if the cost of those additional benefits is not very significant then go with that option of Term Plan.
  5. Payment Options: Different Insurance companies have different payment plan options. Some offer standard options like payment term equivalent to policy term, while others have multiple payment options wherein you can pay the premium in a limited time period like 5 yrs or 10 yrs or up to 60 yrs of age. So payment options availability may also be one parameter for shortlisting your Term Plan.