How to Research for the Affordable Term Insurance Plans?

Life can be unpredictable, isn't it? When you least expect it, an unexpected financial emergency may come knocking. Fortunately, with a life insurance cover in your corner, you can ensure that your family never needs to worry about financial security And when it comes to life insurance, a term insurance plan is the most affordable way to secure the future of your loved ones. Not only do they come with low premiums and high life covers, but they also offer many other benefits.

And we're sure that before you purchase a term insurance, you will no doubt want to make sure that it fits your needs perfectly. Today, with all the necessary information available so easily online, performing the research needed to find the best term plan for yourself and your family has gotten so much easier.

When looking for the top term insurance plans, you must evaluate the following factors. This will help you identify the best online term insurance plan:

Premium Cost –

The premium cost is one of the first factors to consider while selecting a term insurance plan. The cost can vary based on the sum assured, policy tenure, the age and health of the policyholder, and additional riders included. As a rule of thumb, it's advisable to start a term insurance plan early as premiums rise significantly with age. However, remember that the cheapest policy is not always the best. Look for a balance between the premium and the coverage provided.

Policy Tenure –

Choosing the right policy tenure is as important as the amount of coverage. Your term plan should cover you at least until your retirement age or until your financial liabilities are expected to cease. For most people, a term of 30-35 years is suitable. Some insurers also offer policies that cover you up to the age of 85 or even for your entire lifetime.

Solvency Ratio –

The solvency ratio is an indicator of the financial stability of the insurance company. It measures the company's ability to settle its claims. In India, insurance companies are required to maintain a solvency ratio of at least 1.5. A higher ratio typically means the company is more financially stable and capable of meeting its obligations to policyholders.

Additional Insurance Riders –

Insurance riders are additional benefits that you can opt for over and above the basic policy. Common riders include critical illness rider, accidental death benefit, and waiver of premium rider. While riders enhance your protection, they also increase your premium cost. So, it's important to carefully consider which riders are most relevant to your situation.

Risk Coverage –

A good term insurance plan should provide comprehensive risk coverage. This means it should cover various types of risks, including death, disability, and disease. Some insurers offer plans that provide coverage against a broad range of critical illnesses or disabilities, in addition to the death benefit.

Tax Benefits* –

In India, the premium paid on term insurance is eligible for tax deduction under Section 80C of the Income Tax Act, up to a limit of INR 1.5 lakh per annum. The death benefit received by the nominee is also tax-free under Section 10(10D)**. However, if the premium exceeds 10% of the sum assured, the benefit will be taxable. Hence, the tax benefits can also be a factor to consider while choosing a term plan.

The age up to which the cover is in place –

When it comes to coverage, the longer the better, right? But the maximum age up to which term insurance plans offer life coverage varies from one policy to another. Broadly speaking, the longer the cover exists, the better the benefits are for you. That's why it's best to opt for a plan that offers a longer tenure of coverage. So, look for plans with a higher maximum age of coverage.

It's also a good idea to maximize the life cover, so you're protected for a longer period. And there's no donut that the best term life insurance for your needs is one that offers whole life coverage, right up to the age of 99.

The option to pay premiums for a limited period –

Maximizing your cover is a great idea. But keep in mind that it may also mean paying premiums for a longer period. You may find this easy when you're actively employed. But when you retire, and you lose your primary source of income, paying premiums for your term insurance plan may cut into your pension or post-retirement income.

Fortunately, there's an easy work around. Some of the best term plans often offer you the option of paying your premiums for a limited period. So, while the cover may be offered for a much longer period, the premium payments are restricted to a shorter tenure. You could opt for a plan that offers limited premium payment options, so you can settle these liabilities well before retirement. For example, say you opt for a term plan that gives you coverage for 30 years, coupled with the option to pay your premiums for 10 years only. That's a great deal, right?

Online availability –

Convenience is another factor you'll want to account for when you're looking for the best term insurance plans. And nothing excels at convenience the way online life insurance does. With the whole of the customer's journey being supported online, right from purchase to claim settlement, online term plans make the journey paperless and user-friendly.

You save a lot of time and effort, and you can get the application process, premium payment, and even claim raising done online, from the comfort of your home. The need to physically visit a branch office is completely eliminated from the equation.

Claim payout options available –

Payout options vary from one term plan to another. Some plans offer lump sum payments, others give you a combination of a lump sum payout and fixed monthly income, while yet others give you a lump sum payout coupled with growing monthly income. For example, one plan may offer you Rs. 1 crore as a lump sum death benefit. Another may offer you 50% of Rs. 1 crore as a lump sum payout, and the other 50% as monthly income.

The Aditya Birla Sun Life Insurance DigiShield Plan offers you flexible death benefit payout options - as a lump sum, monthly income or a combination of both. The lump sum payment can help your family settle large expenses comfortably, while regular payments can help them meet their regular expenses. The best term policy for you is one that offers you the kind of payout options that will benefit your family's specific needs.

The conditions for claim guarantee –

Claim guarantee conditions are the terms that need to be fulfilled, so the claim can be settled. If the conditions are satisfied, the time for the claim settlement procedure is greatly reduced. Generally, the conditions prescribed include a particular period for which the policy must be held before a claim is made.

Some term plans also include (or exclude) specific causes of death. There are also specific documents that insurers will need. Take a good look at the conditions mentioned in the plans you're considering, and identify the plan with claim guarantee conditions that are easier to meet. That will undoubtedly be the best term plan for you and your loved ones.

The insurer's claim settlement ratio –

This is another important thing you'll need to research before you decide on the term plan you're going to purchase - which term insurance has the best claim settlement ratio? Wondering what the ratio is? Well, the claim settlement ratio is nothing but the percentage of claims that an insurer settles. Naturally, the higher the claim settlement ratio is, the better it is. Why? Well, that's because that means the chances of your family getting their claim settled will also be higher.

The best term insurance plans are the ones that will ensure that your family gets their claim settled in record time. Quick settlement makes it possible for your family to meet any emergency financial liabilities without having to resort to external financing.

Customer support offered –

You'll also need to do a bit of research to see how customer-friendly the insurer is. After all, when things go south, you would want to rely on a team that has your back. That's what top notch customer support does. And it also makes things like query resolution, updation of details, and policy servicing much easier for you. Additionally, it smoothes out the procedure of claim raising for your beneficiaries, since they can access customer support easily in case they're unsure of how to proceed.

So, make sure you research all the areas discussed here. That way, you improve the chances of finding the plan for yourself. Additionally, before you purchase a term plan, it's also a good idea to figure out the level of coverage you need. Our Human Life Value calculator can help you out here. You can make use of this free online tool to identify the amount of life cover you need, so your loved ones are adequately protected.