Term insurance plans are deemed to be one of the best forms of life insurance because of the high cover they offer at affordable rates. For instance, a person who is 30 years old must pay just 700 or 800 bucks a month to cover one crore for 30 years. That’s like spending on watching one movie with friends. Although cost is the most important factor when considering buying insurance, it is, however, not the only factor. With that said, let’s try and go over a few other important deciding factors for buying term insurance policies.
The size of the cover
The size of the cover is one other most important deciding factor for buying insurance. If the insurance you buy does not assure sum that’s large enough to cover all expenses such as any basic expenses that you and your family may incur and other crucial expenses like those arising from your children’s education or marriage. One other thing to note here is that, not only should the term insurance policy cover your expenses, they should be able to cover your liabilities as well. Liabilities can be anything including debts and loans. Big borrowings such as home loans should also be covered.
The cost of the insurance is usually not very high, especially if you start at a very early age. In fact, for all those young buyers out there, the cost for covering an insurance of Rs. 1 Crore for themselves for 30 years from the date at which they buy will be no more than that of a soft drink. When considering the cost of insurance, one should also keep in mind their family’s and their own lifestyle and should envision how this lifestyle changes over the course of a few years.
With each different stage of life comes different responsibilities. For example, a person who is single may have very different responsibilities than the one who is married or one who has kids to care for. But most people would rather go for a vanilla term insurance which is not spiced up than one which would cover a little extra for them, such as an accidental death benefit.
This should not be the case, however. Especially if you have the means to buy that extra coverage. Many people may have heard that they could be covered by insurance for all those major, critical illnesses. This is not true. Health insurance covers only for hospitalization and doesn’t necessarily cover the medical expenses incurred for the treatment of major illnesses.
Tips to choose the best term insurance plan
When buying life insurance, there are plenty to choose from. But the question is, how does one choose something that best befits his needs? It’s very simple in fact. There are some key factors you will need to consider before buying term insurance.
- Value for human life
When you buy term insurance, you expect that you are covered for any major expenses that you tend to incur sometime in your life. Also, your family members will be covered financially, in the case of your absence. Therefore, the term insurance you choose must provide adequate cover. Else, it may not be worth your money. There is a term in insurance that’s used for this kind of thing, and it is called as value for human life.
The human life value or HLV is simply the individual’s income and his loans and liabilities put together. So, the term insurance you choose must have a high HLV, which is the basis of any term insurance.
- Rider benefit
Those term insurances that are deemed to be the best are the ones that cover all aspects. Likewise, it would be an additional benefit for the said insured person, if the term insurance comes along with a rider. A rider is something that provides benefits in addition to the primary policy. For example, let’s say that the insured has a critical illness. Then, he can receive the sum assured, in addition to being diagnosed with the same.
So, just as in that case, there are many such instances where riders can prove to be beneficial. These instances include cover for the loss of employment, cover for a premium waiver, cover for permanent disability, etc.
- Cover enhancement
One of the main features that the term insurance should have is that it should be flexible for enhancement of coverage during those critical stages of the life of the policyholder. For example, the coverage could be enhanced as much as by 50 percent during the policy holder’s marriage or by 25 percent during the time the policyholder becomes a parent.
This not only allows the policyholder to start with a nominal cover but also allows them to increase the cover over time, as their responsibilities and their income increases.
- Cover convenience
Among all the life insurances that are present out there, term life insurance is regarded as the best and most innovative. This is because, one, the premium extension rates have been reduced considerably. And two, buying the term insurance could have never been easier now thanks to the internet. Also, it is now possible to buy term insurance online, without having to go through various medical tests for term plan.
Life is indeed very important. And if life is important to you, then ensuring your life with a term plan should be equally important. Term insurance not only brings you money but also keeps your family safe by making them stay financially afloat in case of your absence. However, you should always keep in mind that you should be extra careful when buying insurance and not succumb to peer pressure. This is because, if you are reckless in buying insurance, it could cost you big time later in your life.