6 Things to Keep in Mind Regarding Term Insurance

It is a prudent decision indeed to invest in one of the best term insurance plans in India, since it is a pure investment vehicle, which provides maximum cover at a low price. It will secure your family in case of your untimely demise or an unfortunate incident that leaves you incapacitated permanently. However, it is essential to choose the cover carefully, so as to ensure that you are not under-insured. If the cover does not meet the basic necessities of your dependents, it defeats the entire point of insurance. This is one of the main factors to be considered according to Ramalingam K, the Chief Financial Planner at Holisticinvestment.in. Be sure to factor in the rate of inflation in your calculations when you determine the cover. Some of the other things to keep in mind are as follows.

Most Important Factors of Term Insurance Plans

1.      Affordable premium: Term insurance is known to be the easiest on the pocket when it comes to premiums. However, you need to achieve the right balance of being able to afford the premium and getting sufficient cover out of the investment.

2.      Ease of buying term insurance online: As per the IRDA guidelines, there might be a reduction of 10-15% in the premium in coming years. This, coupled with the fact that the process of purchasing online term insurance is very simple, makes it desirable. Be sure to assess the plan carefully and be sure that you understand the terms clearly.

3.      Claim settlement ratio: It is a well-known fact that your family's insurance claim may be rejected if the insurance company deems the context as outside of its terms. It is important to find a company that has a high claim settlement ratio, along with ensuring that you are honest about your health habits at the time of the purchase.

4.      A plan that is right for you: It is advisable to choose a company that provides a wide range of term insurance plans so as to find one that suits your financial needs as closely as possible.

5.      Accidental death benefit and exceptional cases: Be sure to choose a plan that will honour the claim in case of an accidental death and be sure to know the exceptions. If the insured person commits suicide within a year of purchasing the policy, it is likely that it will not be covered.

6.      Tax benefits under sections 80C and 10(10D) of the Income Tax Act, 1961: Policyholders can enjoy tax deductions up to Rs 1.5 lakhs on annual premiums paid towards their term insurance plans in India.