Term insurance is designed specifically for life coverage. It offers your family a lump sum payout in the case of your untimely death. This amount is meant to ease all the financial challenges they may face.
Before buying an online term plan, you need to know everything you can about the product. One of these things includes knowing your family’s current and future requirements. Moreover, you should look into the process of buying a policy before you pick a plan. This way, you can make sure you can get the right policy the right way. Here are a few tips that can help you do that:
- Buy at an early age
When it comes to term insurance, the earlier you do it, the better it is. While there is a certain term insurance age limit, the gap between the lower and upper limit is a lifetime. This means that you can have a lifetime’s worth of security if you buy term insurance early. Moreover, the term insurance premium is much lower for younger buyers.
- Have term insurance until your retirement age
While you may know when the best time to buy term insurance is, you should also when you should not buy it or have it. It is not recommended to have term insurance past your retirement unless absolutely needed. While you were earning, it was routine to manage the premium for your online term plan. But, after your retirement, you may not have regular income to pay for the term policy. This means you will be taking money out of your retirement fund to pay for term insurance. Hence, you should only take term insurance that lasts until your age of retirement.
- Don’t believe ‘per day’ premiums
When you start looking for term policies, you’ll see a lot of insurance companies that offer term insurance at a per-day premium. For example, you may have seen a policy that is offered at INR 55 per day. However, that is not how you will be paying premiums. You either will pay the premium with a single payment or an annual payment. Hence, the per-day amount is simply a way of the insurance provider of how affordable their policies are. Moreover, these rates usually only apply to younger buyers or to a policy of a specific tenure.
- Avoid single premium payments
When you decide to buy a term policy, there are few options that you have of making premium payments. One of them is to make a single premium payment. Since the policy has a fixed tenure, it is easy to calculate the entire premium of the policy using the term insurance premium calculator. However, it is recommended that you do not pay the premium at one time. It is better to make an annual payment for your term policy. This way you can stay updated on your policy. Moreover, the amount payable in a single payment for a 20 or 30-year policy may be large.
- Be clear about nominees
A nominee is one of the most important parts of term insurance. It is the person that can make a claim after your death and will receive the sum assured. Usually, it the policyholder’s spouse or children, but you can nominate other relatives as well. However, the nominee of the policy should be clear at the time of buying the policy. Failing to do so can lead to confusion at the time of claim settlement.
Go through the above-mentioned tips when purchasing a term insurance policy to help you make a wise decision. In case of any queries, contact your financial consultant or the lender’s representative.