Term insurance plans had a basic structure when they started off. The plan was supposed to offer an assured sum upon the policyholder’s death, provide coverage till 65 years, and needed annual premiums. The online term plan found nowadays is more complicated than this. Nowadays, there are limited pay plans, rising cover plans, return of premium term plans, and so on.
This increase in the number choices can make you pretty confused when you try to buy term insurance. So, here’s outlining a couple of things that you need to keep in mind when buying a term insurance plan.
Buy A Term Insurance Plan Early In Life
Though there is no maximum or minimum age for buying term insurance, it’s better to purchase the policy early on. As time passes, the premium amount also increases based on the age of the policyholder. In case you develop any disease or illness, it would be harder to get a policy later on. So, determine the amount of life cover you need, and get the insurance.
Buy The Insurance Policy Until The Retirement Age
A thirty-year old guy shouldn’t purchase a term plan up to eighty-year. You’ll need a term insurance plan until your retirement, in most cases. After all, not many people will financially depend on you beyond your retirement age. It makes sense to go for a bigger cover when you’re young and have more financial responsibilities. But, you won’t remain a provider for your family upon reaching the retirement age.
Under The Riders Before Adding Them
Riders are the add-ons that you get with term insurance plans. They’re great when you really need them. But, you should only go for them if they’re specifically needed in your case. Do not go ahead and add the riders because they give you a greater sense of security. For instance, it makes sense for someone who travels a lot to get an accidental death rider because the risk of accidents is higher in their case.
Do Not Go For Small Insurance Covers
Did you know that about 75 percent Indians are underinsured? And, this fact is not just true for people who don’t have term insurance plans. Even the ones with term plans tend to cut corners and go for a low insurance coverage. So, assess the insurance cover you need, instead of simply going for low coverage that would fall short when you need it the most.
One To Two Term Insurance Policy Suffices
Ideally, you need to have just one term insurance plan in your life insurance portfolio. At the maximum, you can have about two policies, but you don’t need anything more than that. It is good enough to have one term plan of two crores, instead of dividing the amount into four policies.
Term insurance plan is like a long term contract between your insurer and you. If you choose right, it will be beneficial to your family in your absence. Consider all the five aspects mentioned above, and you’ll find it easier to select the right plan.