When it comes to choosing a term insurance policy, the tenor definitely matters and you also have to keep several other aspects in mind.
Choosing a term insurance policy can be a tough ask, particularly when you have multiple options at hand. However, the best term insurance plans have to be found out after doing your own homework and research. Term insurance is a particular form of life insurance that ensures coverage for a particular term or tenor, i.e. number of years. When opting for term insurance plans, this aspect should be carefully chosen on the basis of several factors. For a term insurance you can also open your HDFC PPF Account and can get extra benefits.
Some of these include the following:
Number of Family Members & Life Stage-
When buying these life insurance plans and choosing your term, keep in mind the number of family members, especially dependents and also your current life stage. The financial obligations of a single individual will vary from one who is married and has children. The coverage amount and duration should be chosen accordingly with a view towards accounting for future financial needs and other responsibilities.
Evaluate lifestyle costs-
Keep in mind the present lifestyle of your entire family and dependents and choose your coverage and term accordingly. Bear in mind the funds required to maintain the current standard of living and also account for periodic inflation before signing on the dotted line.
Consider your own income and family requirements-
If you are the sole earning member in the family or a contributing member to the family kitty, you should always have coverage for a specified tenor that is enough to sustain regular expenses of your family members.
Keep in mind your liabilities-
When choosing the tenor of the policy, bear in mind your own liabilities like home loans, car loans and so on. Make sure that your family bypasses the repayment burden in case you are not around. Include this amount when you are calculating the ideal coverage amount for your family and factor in the duration accordingly.
Claim Settlement Ratios-
Apart from considering the term and coverage amount, make sure that you opt for an insurer with a higher and better claim settlement ratio than others. This will come in handy when it comes to obtaining secured amounts in a timely manner.
Maximizing coverage with riders-
There is added coverage offered via riders in case of some insurance plans. These include loss of employment coverage, disability coverage, waiver of premium coverage and so on.
You should keep all these factors in mind while choosing the term of your term insurance policy and coverage amount among other aspects.