When selecting the right term insurance plan, it is essential to evaluate several important features to ensure it align with your financial goals and provides adequate protection for your loved ones. From the coverage amount to the flexibility of premium payments, these factors can make a significant difference in the effectiveness of your policy. To help you make an informed decision, let’s dive into some of the key aspects you should consider when choosing the best term insurance plan.
Best Term Insurance Plans – Things Worth Noting
Here are a few aspects worth checking out while selecting the best term insurance plans.
Flexible sum assured payouts:
Prior to buying your term plan, you should understand whether the plan enables a regular income payout once you are not around. You should have the flexibility to choose how the sum assured is distributed, such as through regular income payouts, lump sum amounts, or a combination of both. This will help your family members manage their monthly costs during this period and fill up the gaps due to the lack of a fixed salary. Suppose you are not confident about your family using the lump sum wisely to invest for regular returns upon your demise. In this case, you can opt for the monthly payout option, where they will receive a fixed amount each month.
Coverage for non-working spouses:
Whenever you purchase term insurance, look for adequate coverage for your spouse as well. Some plans offer the option to add your spouse under a joint life cover. This means you may not have to buy separate coverage for him/her. The best plans offer this choice, sometimes with discounts on the rates for your spouse. However, not all plans have this option, and the cost may increase depending on the coverage.
Waiver of premium rider:
You should choose plans that come with the waiver of premium rider. In case of any disability or accident, your income-generating abilities may be limited, and it may be hard to pay your premiums. If you choose the right rider, then your premiums will be waived for the remainder of the policy term, while the policy will continue with full benefits. Let us take an example where the policyholder has a mishap and is unable to work and earn anymore. This rider will help your family members keep the policy protection intact and get financial benefits in the future if you pass away within the policy tenure.
Decreasing/increasing coverage:
You should look for term plans that enable you to increase or reduce your life coverage at various stages. If your responsibilities and commitments are projected to go up in the future, then this is one choice that you should make at the outset. This will help you flexibly scale up or lower coverage based on your specific needs. You should also take inflation into account while increasing your coverage.
Suppose you purchase coverage at the age of 25-28 when you are in the pink of health and do not have many financial commitments. Thereafter, at 35-40, you may have a family, which may necessitate an increase in coverage to take their needs into account. Life coverage models typically increase the amount annually, up to a certain percentage of the sum assured. In the reducing option, coverage can be lowered each year until it reaches a certain percentage of the original sum assured.
These are some of the features that you should check while choosing term plans: the premium amount for your desired coverage, the options to add more riders, and the terms and conditions (noting the inclusions or exclusions carefully).
