A large percentage of the populous in India do not have insurance. This is a worrisome situation. What is more worrying is the fact that even those with higher education and good jobs in the organized sector do not have sufficient insurance coverage. At the most, they may have group term coverage of about one month salary offered by their companies or employers.
It is vital for all individuals with a dependent family to have term insurance. It is also important for people with liabilities that need to be paid off to have term insurance. This type of coverage is the cheapest and most basic type of pure security life coverage insurance that will help safeguard the lifestyle and expenses of dependents in case of sudden unfortunate death of the family’s sole breadwinner.
Listed below are some tips that can be used by individuals to buy the right term insurance:
- The primary rule about term insurance is to avail of a coverage that is about ten times the yearly income in addition to outstanding credit/loans. The total sum of assured amount will ensure repayment of the loans as well as maintenance of the daily expenses of the dependent family members.
- It is necessary for people to equal the proceeds of the policy with the cash flow of liabilities. After a claim has been made, outstanding loans are going to be immediately settled. Hence, a lump sum that matches the loan amount is just about right. The balance of assured sum can be taken as a lump sum or as regular income. If the spouse has knowledge about investments, then the balance can be taken as a lump sum and invested in better returns offering products, else the regular income option should be chosen.
- A large majority of insurance companies provide extra optional riders in addition to the term insurance product. It is recommended that people opt for riders like premium benefit waiver, accidental death benefit, and critical illnesses in addition to term insurance. This will improve the coverage policy and make it more all-inclusive. Coverage for critical diseases offers living benefits and safeguards against possible risk of a life with varied disabilities after coverage of the life-threatening diseases.
- Most insurance companies, especially the popular and renowned ones, tend to settle all insurance claims that are genuine. Claims are generally rejected if they are fraudulent or due to non-disclosure of information about the policyholder’s income or health. Hence, just checking out and comparing the claims settlement ratio of different insurance companies is not a good way to find the best term insurance. You should also check out the records of corporate governance, solvency rations, and breach of regulatory standards, etc.
- There is no major difference between purchasing a term insurance online or from a distributor. People who know how to use the internet and are comfortable with online transactions may opt for online purchase and avail of additional deals and discounts. On the other hand, purchasing the term insurance product from a distributor allows you to have a personal and comfortable face-to-face chat as well as the chance to get answers to all possible concerns that you may have. Whether you opt for a distributor, or purchase online, is a matter of personal choice and the level of comfort that you have in carrying out transactions over the web.