Unfortunate events can occur without warning. In the event that you are no longer able to provide for your family’s financial needs, you have the option to ensure their financial independence with term insurance plans. However, with the superfluity of available term plans, it often becomes confusing to determine which insurance coverage is the best one for you. Here are some tips to keep in mind:
1. Determine the cover amount that your family will need in the future
Your current situation: The number of people dependant on you will change according to your stage of life. When you get married or have children, your expenditure also goes up. Try to find a term plan that offers increasing coverage. You can raise the cover as per the events in your life.
Your family’s needs: It is not just your present income that determines the amount of cover your family might need in the future. Try to factor in inflation and extrapolate the amount of income that they will need:
- to meet the bills
- to support your children’s future education
- to help them maintain their current lifestyle
- to repay any liabilities you have at present like life home loans or car loans
Settle on the cover amount that matches up to all these necessities.
2. Determine the correct tenure
Getting a term plan for the right tenure is as vital as the sum assured. Long cover tenures enable you to bequest a large sum to your heirs. A cover that lasts up to the age of 65 to 70 years should be sufficient as, by that time, you are most likely to have covered all your liabilities.
3. Look for additional riders that might help meet the demands of the future
Benefit on the event of accidental death: In the unfortunate circumstances of your death, your nominee will receive the sum assured.
Protection in case of disability due to accident: An unforeseen accident can result in partial or complete disability.As the insured, you can claim the accidental disability benefit under this rider.
Cover for illness: There are term insurance plans that offer cover for various serious illnesses as well as critical ailments that might prevent you from earning.
Benefit for the life of your spouse: The life of your spouse is precious. The right term plancan cover the life of your life partner, even when you are not around.
4. Take into consideration the cost of the premium
An essential parameter to consider while selecting the best term insurance for is the cost. Term insurance plans have become a necessity in today’s age of leading stressful lifestyles. However, hefty premiums can dissuade some people from buying a policy. It is important to select a plan that offers significant coverage at affordable rates.
5. Look out for additional product benefits
Flexibility of payouts:Themost common procedure is to avail a full payout of the sum assured as a lump sum amount. However, depending on your circumstances, you can also opt for term insurance plansthat offer:
- 50% of the sum assured paid all together while the remaining amount is paid over a fixed tenure as monthly instalments.
- 50% of the sum assured is paid out as a lump sum, and the remainder is disbursed as monthly instalments with regular increments.
Tax benefits:You can claim deductions under Section 80C of the Income Tax Act for the amount of premium you pay for your term plan.You can look for plans that also come with the benefit of tax-exemption of the sum assured payout under Section 10(10D) of the said Act.
Researching online and comparing deals before you settle on the best term insurance coverage can give you a good idea of the options in front of you. Most term insurance plans can be comfortably purchased online these days. Make sure to consider all of the above factors and select an offer that lets you customize the plan as per your requirements so you can secure the future financial freedom of your family.