Something that we do not consider carefully is how vulnerable we are to financial emergencies. While it is no news to anyone that life is uncertain, staying financially prepared in the face of emergencies reduces the burden significantly. Therefore, investing in financial instruments such as a term insurance can be in your best interest. Let’s look at how you can live a financially secure life if you buy the best term plan.

What Is Term Insurance?

A term insurance policy is a type of life insurance that can provide financial security for your family. It is a simple, affordable and uncomplicated form of insurance that offers long-term protection at minimal premium rates. You decide the rate of premium for your policy at the time of buying the term insurance, pay it for the specified period of time, and in return for this, the insurer offers financial support to your loved ones in case of your untimely demise.  

Here’s how it works:

• When you decide the policy period and the sum assured for the term insurance, the premium is calculated based on several personal factors such as your age, condition of health, gender, occupation, lifestyle habits, coverage term and amount, etc. The premium amount, which is decided at the time of purchase, remains the same throughout the policy term.
• You can choose to pay the term insurance premium as periodic payments or as a one-time lump-sum payment. You can also decide the pay-out method for the death benefit, which will be payable to the nominee of the policy.
• After purchasing the term insurance, the insurer is entitled to pay the cover of the term insurance to the nominee of the policy in case of the insured person’s demise within the policy term. 
• Term insurance does not include a maturity benefit at the end of the policy term. 

How To Calculate The Amount Of Coverage You Require?

Each individual has unique financial needs in life. When you buy term insurance, it is crucial to map your particular needs in order to calculate the amount of cover you require to protect your family efficiently. 

Your term insurance coverage depends on a range of personal factors such as your age, lifestyle habits, income range, nature of the occupation, health, etc. You must carefully consider how these factors affect your insurance plan so that you do not end up with an unsatisfying cover. 

Term Insurance Features To Remember

You must be aware of the term insurance benefits before buying a plan to make a well-informed decision. Here are some of the key features and benefits discussed in detail:

1. The sum assured of term insurance is the cover amount you select when buying the plan. This is the amount that is payable to your family members in case of an unfortunate incident. 
2. Usually, anyone between the age of 18-65 is eligible to buy term insurance. This is called the entry age for term insurance. 
3. Term insurance offers long-term financial security at minimal rates, which means there is no additional financial pressure.
4. Term insurance enables you to enjoy greater coverage at affordable prices if you buy it at the early stages of life.
5. Generally, term insurance coverage can go up to several years, even whole life, in some cases. 
6. Several riders are offered with the term insurance plan as add-ons which can be attached to the base policy. You have to pay an additional premium for the riders that you attach to your policy. Some commonly offered riders include critical illness rider, waiver of premium rider, accidental death and disability benefit rider etc. 

The claim settlement ratio of an insurance provider is the number of claims that were successfully settled against the number of claims made. As per the IRDAI annual report, 97.27% of claims were paid by the life insurance industry in the last year. Make sure to check the claim settlement ratio of the insurer before buying term insurance from them. 

Apart from these, you must remember some other important things when looking for the best term plan for your family. Make sure to read the policy document carefully before buying the plan. Check for the exclusions and the inclusions mentioned in the policy document to avoid any confusions in the future. 

It is in your best interest to compare several term insurance providers before settling on one. There are several insurance providers offering different term insurance plans with distinct benefits. It is up to you to decide which set of benefits align well with your family’s financial demands.  Make sure to check trusted insurance providers like Max Life Insurance for a customized financial protection plan.