In any unprecedented situations, you should be protected against any unfortunate events. Moreover, as a responsible individual, you know that your dependents should be protected as well. The tool that can help you best in this goal is term insurance. A term policy offers a payout to your family in case of your sudden death. This payout financially secures your family in your absence.
As beneficial as term insurance is, you need to buy the product right to enjoy all of its features. Doing that is often difficult due to the large number of questions and doubts that everybody has. These include various queries about coverage, premium, type of plan, extra benefits, etc. With all these doubts, you will definitely need some guidance for getting through the process. Here are some tips that can help you:
- Account for your family when deciding the cover amount
The dependent members of family change over time. If you are the earning individual right now, years later you will be dependent on your children for your expenses. At both these stages, your requirement will be different, as will the money required to fulfill them. Similarly, your dependent family members may be in different stages of life and will move to a different stage later. With these changing requirements, the cover amount that you select right now may not be enough for later. Hence, consider factors like future requirements and inflation while deciding on a cover amount.
Moreover, you should take your family’s current lifestyle and your current income into account while you are deciding your coverage. Ideally, the minimum coverage would allow your family to carry their current lifestyle without any issues.
- Include your liabilities in coverage planning
Everybody at some time in their life gets in a situation where they need a loan. Whether it is buying a car, buying a house, or covering some emergency expense, many opt for loan offerings. Hence, you spend a considerable amount of time repaying it back. While short-term loans and loans of a lower amount are often paid of in a couple of years, bigger loans like car loans, business loans, home loans can take decades. During the repayment of the loan, the responsibility may fall upon your family. While they have the payout they receive from the term policy, paying a potentially large part towards your debts means they have much less money they may need in the future. To avoid this, you should include your liabilities as well. This way, your family can pay off your debts and still have enough money.
- Look for a high claim settlement ratio
The main purpose of buying a term policy is that your family can make a claim in case of your death. Moreover, in the situation, the financial future of your family depends on the term policy. Hence, it is very important for the claims process to go smoothly. On the contrary, if there is some trouble with the claim settlement of your plan at the last moment, it can be a tricky situation. To avoid this scenario, make sure your insurance prover has a high claim settlement ratio on the particular plan you are looking to buy. The higher the claim settlement ratio is, the better your claims process is likely to be. A satisfactory claim settlement ration would be higher than 95%.