Money Matters: Buying term life insurance? Here’s what to keep in mind

PNS | HYDERABAD

Term Life Insurance offers a great financial cushion to your family in what could be the most unfortunate time in their lives. It is a great way to make sure that you are with your loved ones at every step of the way. When it comes to securing your family, it is important to consider all factors while choosing a term plan.

Some essential things to keep in mind:
Policy duration: Choose a time period to protect your loved ones as long as possible. There is no minimum or maximum age for term insurance. Earlier you purchase the policy better it is. Do not be very late because as time passes, your premium amount will also increase depending on your age and also if you develop any illness or disease, it will get tougher to get the policy later.

Adequate life cover: Accounting for the many financial duties at every stage of life is necessary to ensure adequate life insurance. A lot of people choose an arbitrary amount that they feel is appropriate, such Rs. 1 crore. Don’t commit that error. You must carry enough insurance to pay for all of your obligations (such as home loans), your family’s living costs for at least 30 years, and any future objectives (such as a child’s wedding or education, for example). Do not forget to account for the rate of annual inflation when computing these costs (the increase in cost).

Disclose all the information correctly: You may have heard and accepted the advice to never tell a falsehood to a doctor or lawyer. It’s best to avoid lying to your insurer as well. Don’t conceal information like drinking and smoking to avoid paying higher premiums. By doing this, you are technically breaking your agreement with the business, and your claim will be turned down later. As a result, you should accurately reveal all the information in the policy forms and double-check it before submitting it.

Type of riders: Term insurance riders is an additional benefit in a term insurance policy that gives you supplementary coverage. Term plans offer various riders including critical illness, accidental death benefit, etc., to enhance the coverage of your plan at a minimal cost. Some riders include accidental death benefit rider, critical illness riders, income benefit rider, waiver of premium rider.

Add nominee: Make sure to properly enter the name of the nominee on the insurance form. But who is eligible to be an insurance nominee? It should ideally be your wife, kids, or someone else to whom you intend to distribute the proceeds from your term plan. However, avoid nominating elderly persons (in general).

To ensure that your nominee receives the money in the event of your passing, make sure to include this information in your WILL as well. Alternatively, if you do not plan to write a WILL at this time, you can purchase a life insurance policy under the MWP Act.

Premium payment terms: Payment flexibility enables you to pay the premiums towards your plan as per your income pattern and convenience.

Right insurer: Select a trustworthy partner that has a consistently high claim settlement ratio and a convenient claim settlement process.