In today’s world, ensuring financial well-being is paramount. Imagine having a product that ensures your loved ones are taken care of even after you are gone. That’s where term insurance comes into play. It acts as a financial replica of yourself and protects your family should you die.
When you buy insurance, there is an annual fee to protect against potential risks. Insurance companies will pay your family and loved ones a lot of money if something happens to you. Think of it as a safety net with coverage options ranging from 1 billion to 5 million or even 10 million. This money replaces your financial support and allows your family to maintain a lifestyle when you are no longer home.
If you are honest and transparent during the purchase process, the insurance company will pay the full amount immediately upon your death. You will have up to three years to discover fraudulent information, after which you will be obligated to make payment without further questions. Your loved one can receive the benefits, with exceptions such as suicide or criminal acts leading to death within one year.
When considering term insurance, it is important to evaluate various factors such as:
- your annual income
- EMI and loans
- Daily expenses such as rent, bills, groceries, health insurance premiums, and other insurance premiums.
- Children’s tuition (1L or more in big cities) and university tuition (20L or more for MBA colleges).
- Pre-existing life insurance policies (if any).
It is also important to consider the impact of inflation. So his billion cover today is equivalent to him 4.5 liters in the next 50 years.
A term plan is designed to cover your family’s financial needs in the event of your untimely death, especially until your children are financially independent. Premiums tend to rise significantly after life expectancy exceeds 70, so consider choosing a term plan that covers your family until your children are settled and can fend for themselves.
Before investing in a term insurance plan, it is important to consider certain key factors to ensure that you choose the right plan for your needs. This expert guide will help you understand the intricacies of term insurance and make an informed decision.
When choosing term insurance, it is important to consider the following insurer-specific features:
Check your insurance payout rate
Check the insurance company’s track record of paying claims quickly. Look at the three-year average claim resolution rate and the percentage of claims resolved within 30 days.
This information can be found in the annual report published by the Insurance Regulatory and Development Authority of India (IRDAI). Or contact a Ditto Insurance Professional Advisor.
Check Complaint Volume
Note the total number of complaints received per 1,000 complaints registered. If this number is above 20, we recommend that you reconsider your choice of insurer. Companies are obliged to disclose this information on their websites.
Evaluation of settlement amount ratio
Examine the total settlement amount as a percentage of the total invoice amount. A ratio above 90% guarantees fair pay, and a ratio above 98% is considered excellent. This information is included in his IRDAI annual report.
When considering policy-specific features, the following are important considerations:
critical illness benefits
If you are diagnosed with a serious illness that may affect your ability to work, this benefit allows you to receive benefits to help your family cope with the crisis. Please carefully review the scope and terms associated with this offer.
Accidental Death Benefit
Consider policies that provide additional protection against accidental deaths and provide additional layers of security.
terminal illness benefit
Some policies pay out the full sum insured upon diagnosis of a terminal illness. This will allow you to access your funds without dying and give you the flexibility to use your funds as needed.
Increased Compensation Benefits
Evaluate insurance that automatically increases coverage over time, usually based on inflation. This ensures that adequate protection is maintained as you age.
Consider the following policy-specific features in addition to the required features:
zero cost option
Some insurers offer a zero-cost option where the premium is fully refunded if the policy is surrendered before maturity within a specified period. This allows you to recoup premiums while maintaining the protection provided by your term plan.
Look for insurance that waives future premium payments if you become disabled or are diagnosed with a serious illness. Choose a policy that offers this benefit in both scenarios.
Consider insurance that can increase coverage at a later stage, subject to medical evaluation. Having this flexibility is beneficial.
life stage benefits
Certain policies give you the option to increase your total coverage when you reach a significant life milestone, such as getting married or having a baby. This add-on feature provides additional coverage when you need it most.
Careful consideration of these insurer-specific and policy-specific features can help you make an informed decision when purchasing a term plan in India. You can also consult a professional insurance advisor for the best insurance advice.