How To Find the Best Term Plan in India For You?: Everyone worries about their family, especially about what would happen to the family in their absence. For this, they choose savings and investment plans according to their financial capability.
But most savings plans fail in long-term retention as they lose value over time due to inflation. And most investment schemes have links with market-dependant securities, making them prone to capital losses. But there is a method of investing which involves high returns with low investment. They are life insurance.
Life insurance is capable of providing guaranteed returns while following the policy terms. But sometimes, regular life insurance can have several tough bylaws and rules. To avoid this, people invest in pure risk life insurance dubbed as term insurance. Read on to know more about this term plan insurance and methods to find the best term plan for yourself.
Term Plan Insurance
Term plan insurance is the most basic form of life insurance and only has the skeletal framework of life insurance. But it benefits the policyholders by defending them from the lengthy and confusing policy terms of regular life insurance.
The policy terms of term plan insurance are so simple and easy because the IRDAI gives the policy terms outlines for the insurers to follow. This is opposite to regular life insurance, where the insurer themselves decide the policy terms.
Apart from the simple terms, these insurance policies can also provide a high maturity amount compared to the premium amount. Which in turn gives people from every category an opportunity to invest in life insurance and benefit their dependents. The importance of term insurance is visible from the high number of people it targets.
In India, people without life insurance are high, as only 10% of the population has life cover. A reason behind this is the poverty rate in India. As of 2011-12, the number of people below the poverty line based on the Mixed Reference Period (MRP) was 26.9 crores, almost 22% of the total population.
Tips To Find the Best Term Plan
A term plan is one of the best low investment high returns plans that helps protect a family’s finances even without its sole breadwinner. The term insurance also acts as a good backup plan to have even in cases where the dependents don’t need depending on funds from a plan. There are some crucial things to consider to ensure that the selected term plan insurance is the best term plan among all. Given below is detailed information on these crucial points in the form of tips.
Know Your Budget Range
Knowing the budget will allow knowing the amount available in terms of savings after completing all the obligations and expenses. Even within this savings, some people would prefer to set aside a fixed amount as a backup plan or in some other investment plan. After all the necessary deductions from the savings, the final amount will be the available fund to invest in a term plan insurance.
Compare Term Plan Insurance
Comparing term plans is the best method to ensure a safe investment and high chances of returns. The potential policyholder can compare the plans on various grounds such as premium amount, payment frequency, riders, ease of payment, death benefit, extra cover, and the insurer’s trustworthiness.
There are limitations on the available extra covers in term plan insurances because of their basic structure. Some people might require a health cover in their term insurance, but it might not be possible. For this, the policyholder will have to purchase separate health insurance. And they will need to know what is health insurance and what are their specific benefits before purchasing one.
Prefer Plans Which Are Capable of Providing Required Death Benefit Amount
Always prefer plans which have the death benefit amount similar to the required amount, which should generally be a high amount. This will ensure that the investment made doesn’t go in vain due to the low amount of returns. A higher return amount will help the dependents get a higher amount to last for the long years.
Know Insurer’s Claim Settlement Ratio
Before purchasing a plan, always verify the insurer’s claim settlement ratio. The claim settlement ratio is the ratio of the claims approved by the insurer to the claims raised by policyholders. The IRDAI releases an annual report which states the claim settlement ratios for all the 24 life insurers in India. So, it is the direct visualization of how many policyholders got returns and benefitted because of the payment from the insurer.
These tips will be extremely useful in choosing the best term plan from the available term life insurance. Use these to ensure the gains from the insurance outweighs the investment. These will also help you have great customer support from the insurer and remain free from the worries about the plan.