Having a financial plan for every phase in your life is essential to keep everything in balance. It is also essential to start a healthy saving process that will keep you ready for uncertain situations. When it comes to securing your life financially, there is an abundance of options that can help. Insurance plans like endowment policy, life insurance, ULIPs are some of the best instruments of financial security and savings. These plans help individuals to ensure a sum for different needs.
There are different types of insurance plans that help in various situations. A term plan is a type of life insurance policy that people take for a specific period. The best thing about the best term plans is that they offer death benefits, so if you die before the term maturity, the nominee on your policy will get the total sum assured.
A person’s health profile will determine what companies, and at what rates a person will qualify for. As an example, life insurance for diabetics would be more expensive compared to a person who does not have a chronic illness. In fact, life insurance for type 1 diabetes will be nearly 50% more compared to a person without any type of health issues. Underwriting guidelines will vary from insurance company to insurance company.
There are different types of term plans provided by various insurance companies, so how would you find your ideal one? There are certain things that you must keep in mind while selecting a term plan. To further ease your hassle, we have prepared a list for you.
First, you need to decide the objective of taking term insurance. Security must be your top priority instead of an investment. Term insurance is among those plans that have a lower premium and higher sum assured.
It is best advised to take up a term plan for a longer duration as financial responsibilities tend to increase with age. The financial obligation you have at the age of 26 years might not be the same at 35 years. You must consider your family’s financial needs when picking the tenure.
#3 Human Life Value
It is simply the monetary value of a human life that is decided with income levels, savings, and liabilities. The human life value denotes the increase of liability and loss of income a family has to bear after the demise of the concerned human. When taking a term plan, human life value must be an important factor of consideration.
Riders in insurance are basically the add-ons that create more value to the plan. You make your base plan more effective by adding riders to it. There are different types of riders available with the term plans. Accident disability, critical illness, waiver of premium, etc. are some of the common riders available within term plans.
#5 Claim Settlement Ratio
Last but not least, you need to consider the claim settlement ratio. It is the indicator of how many claims the company has settled from the total. A low claim settlement ratio is not a good sign. You must not settle for anything less than 95%. If a company has 95% as CSR, that means they have settled 95 out of 100 claims.
So, these are the common factors that need to be considered before buying the best term plan. You will be given an abundance of options; it depends on you to make a well-informed decision.
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