The probability of you not having come across “term plan” is low. Most of it can be attributed to the aggressive pitching of the product by life insurers in the past few years. Irrespective of that, does it make sense for you to buy a term plan? Well, we will quickly go through all the coverage that the plan offers and then you can decide for yourself whether or not you need to buy the plan.
But before that, it is important to know what a term plan is. We all are aware of the fact, that life can throw a lot of surprises or uncertainties at us. While all the positive changes or uncertainties are welcome, the negative ones can set us back by a lot.
The biggest setback comes in the form of death. While there is very little that one can plan for the emotional aspect of such shocks but a lot can be done for the financial aspect. If a family loses their sole bread earner, it can mean a financial disaster for the family. Buying a term plan online ensures financial stability in such times.
A term plan then offers coverage against just one risk, the death of a policy holder. A vast majority of the insurers pay the sum assured to the nominees of the plan in the event of the death of a policyholder. However, if the person outlives the policy, there are no financial gains from the same. Though, off late a few insurers have come up with a variation to term plans that cover such scenarios as well.
Almost all the insurers offer the payouts in any form of death baring suicide. It must be noted that some insurers cover suicide cases after the completion of at least year of policy purchase. But for cases within a year, the chances of rejection are high.
What Should You Do Before Buying A Term Plan?
When you do finally decide to buy a term plan to secure the finances of your family for the future, there are a few pre-requisites. While these are not mandatory steps, following them will ensure that you have a much better buying experience. And that you buy a product that best suits your needs.
- Buy Early
One of the advantages of buying a term plan is its availability for a wider age range. For an instance, a person as young as 18 years can buy the policy as well as a person who is 75 years old can have the policy. While there are no restrictions, buying the policy early is beneficial. When you buy early, you are less prone to medical conditions thus lower risks which translate to a lower premium.
- Right Cover
In a term insurance plan, the policy holder usually has the control of deciding the sum assured. Thus, it is crucial that you set the right sum assured. There are a few tools available to aid you in the same, you can do it on your own as well. You can start by calculating your monthly expenses, factor in inflation for the next few years and add any existing loans or liabilities. This should help you deduce a sum assured relatively accurately.
If you feel that a term insurance plan is not offering you all that you need, you can look at the riders. By paying some additional amount you can enhance the capabilities of your plan. Doing this in advance will keep you away from any last-minute decisions or influence from others.
This is one of the most important aspects of buying a term plan. Instead of spending a lot of time to compare policies on your own, you can take the help of comparison websites. These websites compare policies from different insurers based on a lot of parameters and offer you results. You can then view these results and choose a plan at your own discretion. The two major benefits out of this exercise are lower premiums and a feature rich policy.
Benefits of Buying a Term Plan
It is quite easy to get carried away with one of the most sought-after products on the market. But one must look at the product objectively before deciding. Here are some of the benefits of buying a term plan.
- Nominees receive a substantial lump sum amount in the case of sudden death of a policyholder.
- The amount can be utilized to pay off debts and carry on with life.
- Some plans offer sum assured on diagnosis of critical illness.
- The premium that you pay for the policy is nominal when you consider the benefits.
Buying even a vanilla term plan can add a lot of value to your financial portfolio.