You may have listened to your financial advisor and decided to buy a term plan. However, after researching a little about life insurance policies, you may be more confused than before.Â Buying life insurance term plansÂ is not as complicated as it looks. Although your mind is plagued with lots of questions, here are a few things that shall aid you in buying the best-suited term insurance plan:
Understanding Term Life Insurance Plans
What is a term life insurance plan? Its primary purpose is to create financial support to replace your earnings if youâ€™re no longer around. In the event of your passing away, the insurance company disburses a fixed amount to your family. This corpus makes things easier for your loved ones. It could also be to fund future expenses.
Itâ€™s never about returns
Most people donâ€™t opt for a term life insurance policy because if the policyholder does not die in the policy period, then no cover is provided to the family. However, we are missing the big picture here; the bes-suited term insurance plans arenâ€™t about returns; they are about securing your familyâ€™s future financially.
Death over Taxes
Buying term plan life insurance does indeed give you tax benefits, but that isnâ€™t the main advantage. The primary objective of insurance is protection. If youâ€™re the sole breadwinner of your family, then the death benefit that your family would receive in the unfortunate occurrence of your death would help them keep their heads above the water for some time. It will help them deal with their finances while they come to terms with your absence. Tax rebates are incentives to include insurance in your portfolio as a part of long-term financial planning.
There are multiple insurance plans available, each catering to a specific need. Try choosing the best-suited life insurance plan, which gives you the largest life cover, multiple riders, and other features at the lowest price. Look out for plans that provide cover up to a higher age, like 80, since they protect for a longer period.
Size of Life Cover:
Everyone would want a large life cover, but you need to think twice before you decide on how much life cover you need. It should be sufficient enough to replace your income and help your family tide over the difficult times after your death. It also depends on if there are any debts that you need to pay off. Keep in mind that with inflation, the cost of living shall go up further. An amount that looks big today may not be significant enough at maturity.
The term plan premium is fixed for the length of the policy. It can be paid on a monthly, quarterly, semi-annually, or annual basis. Think about this carefully: how much money can you give annually towards paying it? Donâ€™t overestimate your finances, and donâ€™t stretch your money in trying to pay a hefty premium at the cost of discontinuing your policy midway. The cost of an insurance policy depends upon various factors, including your age, health, and life cover you desire.
Other Miscellaneous Points About Life Insurance Term Plans
Other things to consider / points to remember while buying term insurance:
Choosing the Nominee:
Naming your beneficiary is very crucial. It should be a person who shall need the money most after your passing. It can be your spouse, your parents, or your child. It is advisable to keep your beneficiary informed about the key features of the policy and any changes that you decide to make.
Online or Offline?
Should you buy term insurance plans online or offline? While there is a larger variety of offline plans, onlineÂ term plansÂ are cheaper, and the buying experience is relatively hassle-free. Compare different life insurance plans and make an educated decision before buying one.