A term insurance plan is a kind of insurance policy, which offers a security cover to you for a specific period. These policies do not yield any significant capital at the end of their maturity period; therefore, they are much cheaper than permanent life policies or any policy for that matter. The premiums are calculated by the insurance company keeping into account information such as age, health records, family medical records, and the life expectancy of the individual. There are fixed premiums for a certain time that are supposed to be paid by the policyholder. If the person dies during the tenure of the term mentioned in the official documents, the insurance company pays the face value of the insurance to the nominees.
Here are the basic steps, which you need to follow if you have been wondering how to buy a term insurance plan –
- Know your requirements – you need to make sure that the amount of your term insurance is enough to take care of your family after you are no more with them. With this thought in your head, you need to evaluate everything, from your income sources, your expenditures, and expenditures of the people dependent on you, debts, liabilities, and the lump sum amount to support their existing lifestyle. With these factors in mind, you need to have a rough idea of the entire amount of insurance you would sign up for. You might encounter policies like the medical insurance plan, or health covers too, depending upon your needs, you can sign up for a suitable plan.
- Have a good look at all the options – the market is not short of the choices available for you to select the best insurance policy. Do not blindly trust the opinions of anyone and ensure that you take a thorough look at all the primary components and pointers offered by each firm. Consider the premium, policy duration, criteria, and then pick the deal, which you think is most appropriate for you.
- The claim settlement ratio – it might be possible that you would overlook the claim settlement ratio, which means that the insurance company might pay fewer amounts than that promised to your family. To make sure that such a thing does not happen, check the claim settlement ratios and the companies offering the best extent.
- Inflation protection – to make sure that at no point your insured amount falls prey to inflation and gets its value deducted to a considerable extent, look for policies that offer you protection against inflation.
- Consult an expert – once you are done with all the research on your part, do not forget to consult an expert advisor who will help you in finalizing your policy as well as read every term so that any fraud company does not lure you and no loopholes are left.
These are the very simple and basic steps, which will guide you in your venture of buying a term insurance plan and securing the needs of your family with and without your presence.