Why is it important for every person to choose right term plan?

You’re alive and earning right now, which means you can manage household expenses. Imagine, if something were to happen to you tomorrow, who would fill your shoes? Who would ensure your children’s education? The answer to these questions lies in life insurance, particularly term insurance. If you’re planning to get term insurance, there are essential things to consider. But if you’re unfamiliar with it, you first need to understand what term insurance is and why you should have it.

Term insurance is the basic plan of life insurance, but it is the most powerful product that provides extensive coverage at an affordable price for a long period. You need to pay premiums every year for a fixed term of 10, 20, or 30 years. If something unfortunate happens to you during the policy term, the nominated family member receives the insurance coverage amount. If you survive the policy term, you get nothing in a regular term plan.

Everyone should consider getting term insurance. It provides financial security to the family after the person’s death. The family can use the money for household expenses, children’s education, marriage, and financial responsibilities like loans. Term insurance is crucial, especially if you are the sole breadwinner in your household.

Youngsters should opt for term insurance right at the beginning of their careers. Taking insurance at a young age results in lower premiums. These premiums remain fixed throughout the entire policy term. Otherwise, as the age increases, the premium graph will also rise. Let’s understand this with an example. According to Policy Bazaar’s website, if you take ICICI Prudential’s iProtect Smart term plan with a coverage of 1 crore rupees at the age of 25, the annual premium is 10,856 rupees. However, if you take the same plan at the age of 33, the premium will be 14,241 rupees.

It is also essential to know why people do not buy pure life insurance like term insurance. In reality, people think that in term insurance, there will be no returns if they survive the policy period, and the money they deposited will be lost. So why opt for term insurance? Due to this perception, companies are now offering term insurance where a promise is made to return the premium or life insurance is being sold with returns. However, remember, this is not pure, i.e., regular term insurance.

Now, let’s talk about choosing the right term insurance. First, assess your income, assets, and financial responsibilities. If your income and assets are less than your financial responsibilities, you should definitely consider term insurance. Financial responsibilities include household expenses, loans, children’s education, and retirement goals. The coverage of term insurance should be sufficient to meet all the needs of dependent individuals in case of your absence. When selecting life cover, do not ignore inflation because the money that may be enough today might not be sufficient five years from now.

Always choose a reputable and financially strong insurance company. Check the company’s claim settlement ratio, speed of claim settlement, and customer service. Before buying term insurance, carefully read the terms, rules, and what is not covered in the policy document. In case of any doubts, discuss them with the insurance company.

The market is full of various insurance companies, each offering different plans with varying premiums and benefits. Do not choose a policy solely based on lower premiums; instead, ensure that the premium you are paying provides adequate life cover. You can compare policies on insurance aggregator websites to make an informed decision.

Many term insurance plans come with the option of add-ons or riders. Critical illness cover, accidental death benefit, accidental permanent disability, and other riders can enhance your coverage. Based on your needs, you can customize your coverage by adding riders and achieve comprehensive protection.

If you have any existing illnesses or have undergone surgery, be sure to inform the insurance company when taking the policy. Also, disclose habits such as smoking and alcohol consumption. Suppose, at the time of policy issuance, you did not smoke or consume alcohol, but later on, you develop these habits. In that case, it is essential to update the insurance company about these changes. Failure to provide accurate information can result in claim rejection by the insurance company.

Term insurance takes care of your family in your absence, so it is crucial to have it. Now, learn a few more things. Buying term insurance doesn’t mean you can be carefree. Life is dynamic, and circumstances change. Therefore, it is essential to review your policy periodically. As your income and responsibilities increase, keep enhancing your coverage. Consider getting insurance before starting any investment. Term insurance qualifies for a tax deduction under Section 80C of the Income Tax Act, allowing you to claim deductions on investments of up to one and a half lakh rupees.