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A guide to best term insurance

Published by Atul Kumar Pandey on November 21, 2022.

Unlike traditional insurance covers, the life insurance policy in today’s time is not only bought by elders or middle aged people. The expansion of the insurance sector has led to introduction of a wide range of features to secure your present and future. It is where term insurance came into the picture.

Insurance contract

Wondering what it is? Here is the detailed guide to the best term insurance policy.

Keep scrolling through to know.

What is term insurance?

Term insurance refers to an insurance policy that promises to pay a lump sum death benefit to the insured’s nominee in case of an untimely demise. It is the agreement between the insured and the insurer. In an uncertain event, the policyholder’s family is taken care of and is offered a financial cushion. However, suppose the insured survives the policy period, then!

In that case, no benefit is offered to the nominee until and unless you opt for a premium return policy, where the policyholder receives an aggregate of all the premiums paid.

You can buy the endowment policy online to fetch the maximum benefits.

Tips to select the best term insurance plan.

If you are thinking of investing in the best term insurance plan, here are a few tips to help you choose the best one. However, before planning to buy the best term insurance, you need to follow the below-mentioned steps:

Assess your requirements.

The sum assured refers to the amount the nominee receives after the policyholder’s untimely demise. This sum assured amount must be adequate to offer a financial cushion to your loved ones in case of your absence. To determine the sufficient amount, you will have to consider the following things:

  1. Number of financial dependents in your family.
  2. Your current liabilities.
  3. Funds required to meet the current lifestyle of your family.
  4. Inflation rate in the economy.
  5. Amount invested in meeting the monthly financial objectives.
  6. It should be at least 15 – 20x your present yearly income.

Choose insurer carefully.

It would help if you took the following things into note before buying the best term insurance policy:

  1. Claim settlement ratio: you must ensure that you buy the best term insurance policy from an insurer offering a high claim settlement ratio to the insured. This ratio signifies the percentage of claims that the insured offers. You must check the claim settlement ratio, as it shows the claim settlement record by the insurance company you choose.
  2. Solvency ratio: The ratio shows whether the company will have enough liquidity to settle your claims. The solvency ratio helps determine the insurance company’s financial ability to meet its customers’ requirements. Higher solvency shows more financial stability for the insurance company.
  3. You must also check for the grievance ratio, as it shows the trustworthiness of an insurance company.
  4. The waiver of premium option in case of an illness is the additional benefit that the policyholder must consider before choosing a term insurance policy.
Filling the form

Use premium calculator.

It is crucial to ensure that the premium you pay for the best term insurance policy fits your budget. To find this out, you can use a premium calculator available online.

Now that you know how to choose the best term insurance policy provider, keep scrolling through to learn the steps to purchase term insurance online. In addition, here is a detailed guide for you on how to invest in endowment policy:

Steps to purchase term insurance online.

Enter you details.

On the insurance company’s website, you need to add the following details:

  • Gender,
  • Age,
  • Date of birth,
  • Habits like smoking, drinking,
  • Monthly income,
  • Contact details and much more.

Enter policy tenure and sum assured.

If you are a young individual, you can opt for a longer tenure for the policy. For the middle-aged person, it is advisable to go for a shorter term. As you age, the term insurance tenure keeps decreasing, and the premium amount keeps increasing.

Choose insurance payout mode.

You can either opt for a lump-sum payout to the nominee on your demise or can either opt for a regular monthly payout option to ensure regular income for your family members.

Choose riders.

By investing a small amount in a rider, you can enhance the financial coverage of your family. For example, if you have a family history of critical illness, you can add a critical illness rider by paying the additional amount to your term insurance policy.

Fill KYC form.

After this, you are required to enter your name, contact details, and address. Also, you need to upload the ID proof for the KYC process.

Fill medical details.

You even need to provide the health details like weight, height, habits like smoking and drinking, and medical conditions, if any.

Health check-ups.

The insurer can ask you to go through the health tests if you apply for the policy at a certain age.

Read terms & conditions.

To understand the exclusions of the policy, you must carefully read and understand all the terms and conditions of the policy you want to apply for.

Make online payments.

For an online term insurance policy, you can pay via credit, debit card, or net banking. Upon the approval of the policy, a soft copy will be shared with you through email, and a hard copy will be posted later.

Following all these tips and tricks and the steps will help you to buy the best term insurance policy that can help you achieve the goal of financial stability without any hassle. In addition, you can check for an endowment policy to protect your loved ones and build up wealth.

Categorized in Finance and tagged in , .

Published by Atul Kumar Pandey

Atul Kumar Pandey is a creator of atulhost. Being a business management graduate, he has a flair for business writing but also likes to dabble in technological trends. He is a voracious reader and an avid tech tester and loves to try new things.

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