A term policy is a pure form of life insurance plan that offers monetary benefits if the nominees make a successful death claim. A term insurance plan does not have any maturity or surrender benefits, resulting in a higher cover at an economical cost. You can purchase a term plan to ensure the financial security of your loved ones in your absence.
However, you can provide your family members with adequate financial coverage only if you can find a suitable term insurance policy. Here is a list of certain aspects to check out before buying such a policy.
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Premium
A key advantage of a term plan is that you can purchase it at an affordable price. The payable premium for your policy will be considerably lower than other life insurance policies. However, the premium of a term life insurance policy can vary among insurance providers. A quick online comparison of different term plans will help you find a cost-effective policy. However, keep in mind that the price of a policy is not its most important aspect. Read on to learn what other features you must consider.
Claim settlement ratio
offer a significant life cover to the policyholder’s nominees. If an unfortunate event results in the insured’s absence, the nominees can make a policy claim. You must ensure that your dear ones do not have to end up empty-handed due to a claim rejection by your insurer, and the best way to do so is by checking their claim settlement ratio.
It is a ratio between the quantity of claims an insurance company settled in a given year to the number of claims they received during that particular year. A higher ratio suggests that your nominees will not have to face any trouble in getting the sum assured in their time of need. While checking the claim settlement ratio, also find out the actual number of settlements to get a better picture of an insurer’s trustworthiness. For instance, if an insurance company has managed to settle 9,500 claims out of the 10,000 claims received in a year, then that insurer is reliable.
Solvency ratio
When purchasing a term policy from an insurance provider, you have to be sure that the company is capable enough to settle a large number of claims in a given year. An insurer may receive a significantly high amount of claims after a natural disaster. How can you be sure that they will be able to pay the benefit to your loved ones in that scenario? The solvency ratio can help with that.
The Insurance Regulatory and Development Authority of India (IRDAI) regulates the solvency ratio, which indicates the financial competence of any insurer. IRDAI makes it mandatory for the insurance company to sustain a minimum of 1.5 solvency ratio.
Additional covers
Term insurance plans in India come with riders that enhance your existing policy. When choosing a term plan, you can consider investing in riders, like:
- Critical illness:A life-threatening disease can significantly hurt a family’s finance at any moment. If your term plan comes with a critical illness rider, the insurer will pay a large cover to help with the hospital and household expenses during your treatment.
- Accidental death:This rider pays an additional sum assured over the existing term plan’s cover if an accident results in the policyholder’s absence.
- Waiver of premium: If you have this cover, the term plan will continue even if you cannot pay the premiums due to any incident leading to permanent disability.
There are many term insurance benefits. However, they can help only if you have an appropriate cover for your family. You can follow the above suggestions to ensure the same.