Top Things to Consider Before Buying Term Life Insurance Plan
Term life insurance is the type of life insurance plan that provides coverage for a limited period of time at a fixed rate. These policies are offered with a basic structure where the plan provides the coverage for a specified term of years with an annual premium. The coverage amount will be paid to the beneficiary if the insured dies during the term. It doesn’t offer the benefits of the policy if it is not active or expired after the specified time.
Term life insurance plans are different from permanent and high-value life insurance plans that provide coverage benefits for the lifetime. Permanent life insurance plans also have a savings component that is not available in term plans. However, term insurance policies are initially less expensive as compare to other life insurance plans such as whole life and universal life insurance plans. Today, there are different types of term insurance plans based on payouts and premiums.
- Convertible Term
- Increasing Term
- Mortgage Term or Decreasing Term
When you are planning to buy a term life insurance plan, it can be a very complex and challenging process to select the right policy depending on your needs. Here’re the top 5 things that you can consider while searching for the right term insurance policy:
Term insurance coverage
The very first thing that you should do is to calculate how much insurance coverage you want for your family to cover all their needs. While calculating your coverage, you should include monthly expenses, future inflation, liabilities, and future life goals such as education and marriage. It will help you to calculate an approximate value that your family will need in case of your unfortunate death during the term insurance coverage period.
Tenure of term life insurance
After calculating how much insurance coverage your family needs, it is important to determine till what age you want insurance coverage in order to provide financial stability to your family after your unforeseen demise. The tenure of your policy should not be too little or too high to avoid any financial obligations. The best way to determine this is to make an idea about after what age your kids and other members will be well settled and won’t need any financial coverage to support their future needs. Along with this you will also need to determine by what age you would have sufficient savings to take care of your spouse in case something was to happen to you.
Suitable payout options
The payout option you choose will determine the premium amount you have to pay annually for your policy. Try to calculate a lump sum payout you want as per your requirements if the regular monthly payout is not available in your policy.
Find the right insurer
Different insurance companies offer different types of term life insurance plans in the market. It is very important to select the right insurer that best suits all your requirements to provide insurance coverage to your family. You can consider the factors like claim settlement ratio, solvency ratio, financial background, and market reputation to find the best term insurance company for your needs.
These are some common things that you should consider while searching for high-value life insurance plans. It’s always a better idea to consult with an experienced and qualified insurance broker to understand different term insurance policies to make the right decision as per your requirements.