7 Things to Know Before Buying Term Insurance Policy

An individual’s life is uncertain and their sudden demise can lead to financial and emotional loss for their loved ones. A term insurance plan is a financial instrument that provides a death benefit amount to the nominee of the policyholder in exchange for the premiums after their demise. There are numerous term life insurance plans available but before choosing the right plan it is necessary to keep certain points in mind.

Things to know before buying a term insurance policy

1. Compare the claim settlement ratio of different insurance companies

Before buying an insurance policy one must check the claim settlement ratio of the term insurance company. This ratio indicates the number of claims settled by insurance companies out of the total claims received. 98% claim settlement ratio means out of 100 claims, 98 are settled by the insurance company. A high CSR ratio is an indicator of a company’s credibility.

2. Assessing your financial requirements

Financial requirements, medical needs, family dependency, and ongoing loans, should be assessed before buying a term insurance policy. One should choose the plan that matches their requirements and provides financial support to their family in their absence.

3. Tenure of the policy

Before choosing the term plan it’s important to consider the tenure of the policy. The tenure should not be too short as the policy will expire before your financial needs are met. The long tenure of a policy attracts a high premium amount which leads to a financial burden. The age of an individual should be considered an important factor while determining policy tenure. It’s necessary to choose the right tenure which can help you fulfill your financial requirements.

4. Look what is not covered in your term plan

It’s important to read the details of every term plan carefully before opting for one. Some plans do not provide coverage in certain instances. Most common instances when coverage is not provided by the insurance company include death by suicide, pre-existing illness or critical health issues, and demise due to engagement in illegal or risky activities. However, various plans have different terms and conditions.

5. Make a comparative analysis before opting for a term plan

There are several plans available in the market. A comparative analysis helps you make the right choice. The analysis can be made by keeping certain factors in mind such as premium amount, coverage, plan tenure, claim-settlement ratio, features, etc. To make a comparative analysis an individual can use insurance comparison portals or consider reviews and ratings of the plan.    

6. Disclose if you smoke or intake alcohol 

While opting for a term plan it’s necessary to disclose whether you smoke or intake alcohol. This is a key factor that is considered while calculating the premium amount for your policy. Hiding such facts from the insurance companies may result in the rejection of claims. So make sure that you don’t hide such facts from the insurance companies for a hassle-free claim process. 

7. Cost of premium

An individual has to pay a certain premium amount either monthly, quarterly, or yearly. Before buying term insurance, the cost of premiums should be considered as an important factor. A person has various financial obligations in his life. The cost of a premium should not create a financial burden on an individual in the long run. 

Conclusion 

Term insurance is considered one of the right investment plans to secure the future of your loved ones. Choosing the right plan is necessary to secure the future of your loved ones even in your absence. While opting for a term life policy, you can consider the factors provided above to make a wise choice. For any insurance-related assistance, you can contact the experts at PolicyX.com. PolicyX.com is one of the most trusted insurance advisors in the country and is well known for it authentic advice to its customers. 


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