Things to consider before buying a term insurance policy

Why term insurance matters - Term insurance is the most basic and least expensive type of life insurance. It gives a large sum assured at a fairly low premium, which will make your family financially secure in the event of your untimely demise. With several options floating in the market, it is important to keep some of the major points in mind before buying a policy to decide if it is something you want.

Calculating the right amount of protection - The most important thing is to decide the correct sum assured. Experts advise you to choose coverage of not less than 10 times to 15 times your income per year. Consider existing loans, future costs like children's education costs, and inflation over and above that. Choosing too little coverage will make you financially exposed for your family, and choosing too much coverage will make premiums unnecessarily high.

Choosing the optimal policy period - The term of the policy should preferably be equal to your career span or the period by when your dependents are self-sufficient. The mistake of purchasing a low policy term which lapses when the dependents are still dependent on you is common. Or, purchasing a very high tenure might imply paying premium for more years than necessary. A balance must be achieved so that cover is available when it is most needed.

Comparing premiums and features - Premium varies between insurers for the same sum and duration of insurance. Compare a few policies online before signing a policy. Apart from the premium, check for parameters like claim settlement ratio, other riders like critical illness or accidental death benefit, and whether the insurer offers flexible premium payment terms. Additional premium can be worth paying for greater claim reliability and other benefits. Buying term insurance is a long-term investment, and you need to choose the right scheme. By ascertaining your financial needs, comparing scheme of policies, and making proper disclosures, you can choose the right policy that provides maximum cover at minimum cost. The right term insurance scheme provides a cushion of funds that shields your family from uncertainty in the event of your absence.

Making adequate disclosures - While purchasing term insurance, provide correct personal, medical, and lifestyle details. Misrepresentation or hiding facts can lead to future claims being denied. It is also advisable to inform the nominee about the policy details so that they can file a claim with ease in times of need. Honesty during application will allow easy settlement of claims by your successors in the future.