22 January

How to Buy the Right Term Insurance Plan?

Category: Moter insurance

How to Buy the Right Term Insurance Plan?

Life very often than not gives you second chance to do the right thing, but death doesn’t follow suit, the lesson right insurance policy shouldn’t be learnt the hard way. Once you are gone, your money/policy won’t reach the needful beneficiary if you don’t have the right policy.

 So, what is a Right Policy?

A right Policy would be the one that covers all your future financial goals as well as all your outstanding liabilities. You can further customize it according your needs and for that you need to make sure that you tick mark all the right boxes only. The tenure of the policy must cover your hours of need. Loss of loved one is devastating for everyone and often financially wrecking for the family and if they don’t get the benefits of policy in those times, it makes it only worse and your lifetime savings go to waste.

 Zero error on your part:

While you can’t guarantee everything, what you can guarantee is that there are no errors on your side. Insurance is a contract of utmost good faith and slightest bit of wrong info might render the contract null and void. The lower premiums for non-smokers, non-alcoholics might tempt you but tick only the right boxes, as concealment of lifestyle habits and/or medical conditions might result in claim rejections. Every year about 2% of the insurance claims are rejected on these grounds…! A few extra bucks today might help you help your family when they really need it.

 Price isn’t the only factor:

The lack of investment component makes term insurance one of the cheapest forms of life insurance. A cover of the size of about 1 crore can be bought for premiums amounting to Rs. 8,000 to Rs. 10,000 p.a. Along with the small size of premium you should also look into reputation of the company, make sure, it’s clean and customer oriented. A cover 1,000 Rs. Cheaper than others but of no use in times of need isn’t a cover worth buying.

 Medical is a must:

Usually companies themselves put you through several medical check-ups, others ask you to give a declaration of good health but you should always insist on medical check-up, giving them no grounds for claim rejection at later stages. In case you agree too only declaration, it might become counterproductive for yourself as well, the company might argue that you lied and was already ailing when he brought the policy. Once you give the medical documents to the company, the onus now shifts towards them or the medical expert, but not on you. Also, the companies can challenge these medical records only within 3 years from the day of your policy subscription.

 Opt for the right duration/tenure:

The intent of the term plan is to serve as replacement for your income, therefore, the policy should cover the age up-till you intend to work. For some it’s 55 years and for others it might be up till 65 years of more, but 55-65 is the normal range. One should always prefer the policy cover till 65 or more. A plan of 15-20 years if ends in your 50’s isn’t a good news as in your 50’s your needs for insurance are highest. New policies in your 50’s will be very costly and one might be denied the cover citing causes like he wasn’t taking good care of his health. There are certain covers that extend up to 80-90 years, if you want to leave behind a legacy for your heirs, although many advice against it for the greed from anyone of them might deny you the much needed medical attention when/if needed.

 Periodicity and Mode of Payment:

A good plan once bought shouldn’t be let to lapse merely due to delays in paying premiums. ECS mandate helps you avoid that, which means that even if you forget, your bank will automatically pay from your account, this too becomes a problem if you have low account balance. The best option would be standing instructions to your credit card firm to auto pay your premiums when due every year and you can later settle the credit. The insurers often give an option of monthly, yearly, half yearly payments of premiums, among them even though the monthly option is the costliest, it’s preferred due to low outflows however there are chances of missing out on premiums, so, some people prefer annual premiums if cash is not a constraint.