Some important factors that need to be considered while buying a term insurance plan to get a good discount on premium.
Life has become extremely stressful and equally sedentary. With an increase in accidents, life has also become unpredictable. So it becomes utmost important for every one of us to safeguard the future of our loved ones. Here comes the importance of Insurance Policies.
However, when you go online to check the best insurance plan for yourself, you will land in a world of information with loads of choices and options! There are various types of insurance options available in the market.
However, if you are looking for insurance coverage alone with no element of savings, then Term Insurance is the answer to your needs. Let me give you a quick idea about term insurance plan and what attributes you should consider while buying a term insurance plan online.
What is Term Insurance Plan?
Term Insurance as the name suggests is a plan where the death benefit of the policy is given to the nominee on account of the death of the insured person. If the insured dies within the policy tenure, the nominee would receive the entire sum assured as Death Benefit and the policy would terminate. However, if the insured outlives the entire policy tenure, there is nothing payable to the policyholder.
Since term plans have no maturity benefit, it is the cheapest form of life insurance available. It is the purest form of high insurance coverage at the lowest cost.
However, there are variants of Term Insurance coverage like increasing term, decreasing term as well as term plan with return of premium option. Term plans can be purchased online now. There are various benefits of purchasing the same online.
According to the recent report of the Boston Consultancy Group, Indians use the digital platform to compare for a pre-sales comparison to choose the best insurance policy. Even post sales digital influence is high in India.
Let us understand how to compare and choose the best term plan online to get the best premium and coverage.
How to compare various term insurance plans online?
Off late, owing to the advent various mobile apps and user-friendly websites, information is literally available at the click of your fingertips on the internet. Comparing various term insurance plans online is very easy and convenient. It just takes a few steps to know which term insurance plan best suits your insurance needs. An apt term insurance can be selected by comparing various term plans based on the following factors:
- Sum Assured: The most important factor to be considered while buying term insurance online is the Total Sum Assured offered by the various insurance companies. Sum assured is nothing but the guaranteed amount of money that the policyholder will receive.
- Features and Benefits: At the time of selecting the best term plan suitable for you look for the features that the term plans of your choice are offering. Also look for the benefits like the riders or add-on covers etc. that term plan is offering. It is a good option to purchase a term insurance plan that provides basic coverage and also offers additional benefits for riders or add-on covers. So the insurance provider who provides term plan with extensive options for riders and basic cover can be considered as a preferred option.
- Premium and Coverage: Always opt for a term insurance plan that provides the highest coverage at a minimum premium. Remember both Coverage and Premium are important but do not make a mistake to opt a plan only because it is available at a cheaper premium.
- Authenticity: While purchasing an insurance policy online it is always recommended to validate the authenticity of the insurance provider. This is very important as buying a term insurance is a long-term investment so always choose the provider whose fundamentals are strong, has proven credentials and has a strong customer service.
- Claim Settlement Ratio: Claim settlement ratio is the ratio which states the number of insurance claims settled out of every 100 claims received by the company. So invest your time in doing a little research about the insurance company and choose an insurance provider who has a healthy claim settlement ratio. The information of claim settlement ratio is published by IRDA every year for all the active insurance companies.
- Inflation: Term plans usually have a longer maturity tenure of 10-20 years. In such cases, one needs to take into consideration the prevalent and expected inflation rate. While buying term insurance plan opt for plans that offer an increasing cover i.e. the cover increases by 5% to 10% annually to keep up with the inflation.
Thus above we have seen the important factors that need to be considered while buying a term insurance plan. Also, we now know how to compare term insurance plans online to get a better premium and cover.
The only caveat is that you need to remember, although premium can be reduced significantly by comparing, you should only compare apples to apples and oranges to oranges. Thus, only plans of same benefits or at least similar benefits should be compared to each other. Also, remember, even though premium is extremely important, it is not the only deciding factor to purchasing a Term Plan- the coverage is!