Compare Term Insurance Options Before You Buy One


Life is full of surprises, and some might not be pleasant. Therefore, smart people always try to ensure the financial stability of their loved ones if they are no longer around. A term life insurance can be the right product to fulfil such requirements.

What is Term Insurance?

A term insurance is the most common and affordable insurance policy. The policyholder purchases the plan for a lump sum or periodic payments, and the insurer provides coverage for a specific term. The insurer pays the sum assured to the nominee if the policyholder dies during the term period.

A high sum assured amount at a relatively low premium makes term plans affordable for insurance buyers who can’t go over budget on insurance.

Things to Consider While Comparing Term Insurance Policies

A lot of insurance companies provide term insurance plans with various benefits; however, you need to select the one that suits your requirements. So, following are the factors that can help you identify the right plan.

  • Claim Settlement Ratio

The claim settlement ratio is a percentage used to determine the performance of an insurance firm based on the number of claims it settled in a year. It is calculated as below:

(Number of Claims Settled/Number of Claims Filed) in a Year) x 100

For instance, if a company has settled 9,600 claims in a year against 10,000 claims filed during the same period,

Claim Settlement Ratio of the Company = (9,600/10,000) x 100 = 96

Therefore, a higher settlement ratio may indicate that the policyholder’s nominee has a higher chance of receiving the claim amount. However, you should also consider the volume of claims as well to correlate the ratio with an insurer’s performance properly.

  • Cost of Premium

Compare the insurance premium cost against the same benefits and riders you need. And then, consider a plan that can offer you the required benefits at the most affordable premiums.

  • Critical Illness Cover

While a death benefit is important, there are other situations as well where policyholders would need a financial plan to support their families. What if the policyholder is diagnosed with a critical illness like cancer or a brain tumour? Surely, a critical illness cover amount can help you stay financially afloat in medical emergencies.

Therefore, it is essential to compare the critical illness cover offered by various term plans.

  • Important Additional Cover

Apart from the life cover, term plans also come with add-on covers or riders on payment of extra charges. Some of the common add-ons include:

  • Permanent Disability Benefit

All the future premiums are waived off in case of any permanent disability of the policyholder. So, the policy stays in place for the entire duration without financially straining the policyholder.

  • Accidental Death Benefit

The family members can claim accidental death benefit along with the original sum assured if the policyholder dies in an accident.

You can compare such additional covers offered by various plans and see which one suits your needs.

No one can entirely avert any sudden onslaught of misfortune, but a right term insurance plan can always act as a financial cushion for those left behind. Besides, no plan is complete without a Plan B, which in this case, can be a term plan.

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