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Finance

How to buy the right Term Insurance plan

Summary: With many options available, buying a Term Insurance today is easy. But you cannot buy just any Term Insurance as you need to consider the right factors. Find out how!

07 Jan 2023 by Team FinFIRST
couple signing a insurance contract

With the digitisation of financial products and services, accessibility to different types of life insurance has grown significantly, helping you buy term insurance online in just a few minutes. However, the swift process has also made it easier to overlook some key factors that should be a part of your consideration before you buy an online term insurance plan.

Here is a quick guide on how to buy a term insurance plan while maximising benefits and safeguarding your interests.

Get the appropriate coverage
 

Don't go by generic ballpark figures, as seen in advertisements. Assess the coverage required basis your family's/dependents lifestyle needs, outstanding liabilities, future goals such as children's education or a comfortable retirement for your spouse, and of course, inflation. The general rule of thumb is to have insurance coverage at least 10x or 15x your annual income.

Premium cost should not be the only deciding factor
 

Pure term life insurance plans are the most affordable as they do not have any investment component. However, the premium cost should not be the primary consideration when choosing the right term life insurance plan. The insurer's reputation, a high claim settlement ratio, and shorter turnaround time on claim settlements are factors to consider. 

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Select the right tenure
 

Term insurance is a protection plan that serves as an income replacement in case of your untimely demise. Therefore, the insurance should provide coverage at least until you are actively employed, say till age 60 or 65. Consider a higher tenure if you have liabilities beyond retirement, such as a mortgage, so your family can use part of the claim proceeds to settle liabilities without being financially saddled.

Eliminate ambiguity with a medical test
 

Considering most people now buy term insurance online, insurance companies do not insist on a medical screening unless you want a high insurance cover. In either case, you should opt for a pre-insurance medical test. With this, the onus of detecting any underlying health issues and risks shifts to the insurer and minimises the chances of dishonouring a claim from your nominees. 

Stay on track for premium payment
 

Buying a term plan is only the beginning of the journey. Select a payment schedule that is convenient to you. If paying the entire premium once a year seems like a burden, you can opt for half-yearly, quarterly, and even monthly instalments. Alternatively, if you don't want to carry the responsibility of paying premiums for decades, you can opt for a limited premium paying term as well.

Ensure you don't let the coverage lapse due to non-payment by setting up an ECS with your bank for auto-debits.

In closing

IDFC FIRST Bank allows you to make an informed choice with term plans from some of the best insurers in India – ICICI Prudential, HDFC Life, and Bajaj Allianz. Compare plans and invest in a substantial life cover at affordable premiums. Get bespoke product offerings from IDFC FIRST Bank and secure your peace of mind today!

 

 

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

The features, benefits and offers mentioned in the article are applicable as on the day of publication of this blog and is subject to change without notice. The contents herein are also subject to other product specific terms and conditions and any third party terms and conditions, as applicable. Please refer our website www.idfcfirstbank.com for latest updates.

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