Term insurance policy is one of the easiest policies and most effective ways, through which the family of an insured can be provided with financial security in his or her absence. However, since the plans are never the same and with so many options being put in place, it will be complicated for an individual to come up with the right choice to make. Before selecting the right term insurance plans, follow these guidelines on the features that are in your best interest. Here are five features you should know check in a term insurance plan, which offer the highest value benefit.
1. Satisfactory Coverage Amount
First, a term insurance plan avows to ensure the financial well-being of your dependents or family members as long as you are in existence. The sum assured or coverage amount should be enough to replace your income and cover major financial obligations, such as:
- Daily household expenses
- Education for children and related
- Any outstanding loans or debts
- Long-term goals, e.g., spouse’s retirement, marriage of children
As a general guideline, choose a coverage amount roughly equal to 10-15 times your annual salary. Some insurers offer plans with an increasing sum assured option, which ensures coverage for inflation and changing financial needs.
2. Policy Term Flexibility
Your policy term should match your family’s financial milestones and income years. For example, if you have young kids, the plan should cover the time until they become financially independent. You should also ensure that if you have a home loan, the policy takes into account the time until the loan is repaid.
Most term insurance companies offer policy terms between five and forty years or even until a certain age, such as sixty-five or seventy. So, choose a plan that provides you with flexibility to suit your particular needs.
3. Affordable Premiums
The principal advantage of life insurance is that it gives high coverage at a minimal cost, and it is relatively cheap unlike other life insurance products. However, the rate of premium will depend on such factors as age, health, and assured sum.
Make sure the premiums are not only affordable today but also long-term while comparing plans. Some insurers allow discounts for non-smokers or for policyholders who opt for a higher assured sum; such benefits should be looked into while evaluating your choices.
4. Riders for Enhanced Coverage
Riders are extensions of base coverages provided by stand-alone insurance policies, although sometimes they become expensive depending on the case. The most common riders are:
- Critical illness rider: A disease rider pays the agreed amount upon diagnosis of serious life-threatening illnesses such as cancer, coronary artery disease, renal failure, and stroke.
- Accidental death rider: It is an extra way of effecting payment in the event of death from some form of an accident.
- Waiver of premium rider: It gives the pal of not making the premium contributions when, through permanent body disability of the insured the insured cannot work.
A plan that allows you to select the rider based on your and your family’s medical circumstances.
