How to buy a term insurance policy that is suitable for you
When you start planning personal finances, insurances and investments play a vital role. Hence, when you set out to buy insurance, you ought to be mindful of where and how are you investing. One insurance that is commonly purchased in the term insurance.
One of the reasons why this insurance is so standard is because, by nature, term insurance is a straightforward product. It offers you life cover until you pay regular premiums. In case of your sudden demise, this insurance pays out a lump-sum amount to your family. With the received lump-sum, your family can be financially stable. It also helps them to pay off any debts or liabilities that you’ve left behind.
In this article, we have listed down some of the things that you should keep in mind while opting for term insurance.
An adequate cover:
While buying term insurance, it is crucial to calculate if this term insurance covers all your liabilities such as loans, debts, etc. It should also include the cost of living for your family for approximately the next 30 years. Major expenses such as your child’s education and marriage should all be covered by your insurance.
While deciding this, you must also take into consideration the rate of annual inflation, which is ever increasing. So, say you need Rs. 20 lakhs for your child’s marriage or education, as on today. Now, assuming you have 10 years till you child needs this kind of finance and take a 7% rate of inflation. Then, you will have to make an inflation-adjustment of at least Rs. 39 lakhs when the time comes.
While you can calculate this with term insurance calculate, the formula to calculate this is:
Outstanding liabilities + 300 times your monthly expenses (minus EMIs) + 3 times the current cost of the goals.
Keep your information transparent.
While buying term insurance, you must disclose all the information and papers. Similarly, if you have a medical history, communicate that to your insurer. Hide any of the crucial information will lead to breaching the contract with your insurance company. As a result, your claim will be rejected later.
Keep a nominee. Always:
In case of your uncertain demise, the money accumulated by this insurance will go to your nominee. Generally, you are advised to keep either your parents, spouse, or child as your nominee.
Add riders:
But, only if required. Some term insurances may not cover as many benefits as you want. However, since their premiums fit your current income, you tend to opt for it. In such a case, it is wise to add riders. These riders offer you more cover.
How to apply for term insurance?
Once you have done your research, the question that arises is how to apply for term insurance? Should you approach an agent or should you post an online term insurance application?
Well, both cases have their benefits. However, if you apply for term insurance online, then you can manage all your payments via the internet and hassle-free.
If you opt for an online term insurance application, here’s how to go about it:
· Choose your insurance company
· Go to their website
· Enter the sum assured
· Choose the term insurance
· Select your preferred premium paying term
· Select your bank to make the payment
· And proceed
· Voila! You are done!
When it comes to insurances, term insurance is one of the most sensible investments to add to your financial portfolio. This investment will not only offer you a life cover, but it will also help you achieve your future goals.
