The primary purpose behind buying a term life insurance policy is to provide financial protection to your family if something unfortunate occurs and you pass away. You won’t be there when the claim is paid out to your family. Hence, it is your responsibility to do the needful to ensure that the claim reaches your family in your absence.
Below are some tips that can help you in choosing the term life insurance policy that best suits your requirements:
Calculate your cover amount
The crucial motive behind buying term life insurance is providing financial security to your family members in case of your early death. To ensure that your family is financially secured in our absence, you must purchase your policy for the right coverage amount. For calculating your cover amount, several methods are followed. It is usually said that the cover amount of your policy should not be less than 15x or 20x of your annual income. You can take your financial advisor’s help and ask him to suggest the method that suits you the best, and follow that while comparing term plans. You can then compare insurance plans to find out insurer who gives you the best deal and choose accordingly.
Buy as early as possible
The premium amount of term life insurance remains the same till the end of your policy. Hence, many financial advisors will tell you to buy your term insurance policy as early as possible. The earlier you buy, the lower your premiums will be. And then you’ll have to pay the same low premiums until the end of your policy term.
Choose your riders wisely
Riders are add-ons that can help in better customisation of your term life insurance policy. They may look like an additional expense, but they are vet beneficial in the longer run. Instead of purchasing a completely different policy and spending more, you can buy a rider at much lower rates. If you decide to buy term insurance, check out various riders available on the term plan. Riders such as accidental benefit, critical illness, and waiver of premium are some of the riders you can purchase to cover certain risks and enhance your policy’s coverage.
Provide accurate details in the proposal form
A proposal form is the base of the insurance contract. The insurer will accept or reject your insurance policy based on your information in the proposal form. Instead of asking someone else to fill the form on your behalf, you should fill the proposal form on your own and answer all the questions with utmost honesty and disclose all your past and present medical history correctly. The insurer will decide the premiums based on the information provided by you in the proposal form.
Choose the right nominee
You must choose the right nominee because it is the nominee who will receive the claim amount after you die. Therefore, whoever you choose as your nominee should be someone that you trust. Also, you need to give all the details about your term insurance policy to your nominee, such as are there any prior loans/liabilities that need to be repaid, documents that might be required at the time of claim settlement, etc.
Purchase the policy under MWP Act or create a will
Anyone you owe money to will be paid off first before the claim amount reaches your family’s bank account. If you’ve appointed your wife as the nominee of your term life insurance policy, you can take your policy under the Married Women’s Property Act. A policy taken under the MWP Act will ensure that your claim amount directly reaches your wife’s bank account. In case you’ve appointed anyone other than your wife as the nominee, you can create a will. There are chances of disputes over who receives the claim amount if you have multiple legal heirs or you’re part of a joint family. If you create a will, you can ensure that the insurance claim will reach the right person.
The main reason behind purchasing term life insurance is your family’s financial security in your absence. You can follow the tips given above and buy a policy that suits you the best and provides maximum coverage.