Choose Best Term Insurance Plan in India
What is term insurance?
Term insurance is the cheapest way to protect your family’s finances if worst happens to you. In this article, we will look at how to select the best term insurance plan in India that meets your needs.
Term insurance pays you a fixed amount if you die within a fixed term. So if you take a cover of say 1 crore for 20 years, it will pay 1 crore to your family if you die within next 20 years. You sincerely hope that this is one policy you don’t claim!!
Should I be getting Term insurance?
Many people in India still view life insurance policies as an “investment product”. The other day I met a friend who cancelled his term insurance policy in the second year when he came to know that he won’t get anything in return!
Insurance needs to be viewed as “protection” against the worst case events in your life.In my view, a term insurance policy is the real LIFE INSURANCE and the ONLY life insurance you might need. I have heard people say- “If I die, then what is the use of money?”
A better question to ask is – ‘ How would my near and dear ones cope financially if I die?” If you have taken a home loan or a student loan, do you really want the debt burden to pass on to your family?
As indicated above, this is all about PROTECTION. I think this is also about being RESPONSIBLE.
How much Term insurance should I take?
It depends. As a rule of thumb, insurance companies allow 10 times of your annual income as the maximum cover. The best term insurance plan in India for you should cover the total of :
- Existing debt ( home loans etc.)
- Money required by your family to maintain their existing lifestyle ( in your absence).
- Existing life insurance coverage( needs to be subtracted from the required coverage)
- Premium paying capability- You can always increase your cover as your income increases.
How long should the cover last?
As the premium charged by companies for older people get expensive, if you are confident of repaying all your debts etc by 60 and see your children settled by then, one should not extend the term covers beyond that.
IMPORTANT POINTS TO REMEMBER
- The best term insurance plan in India for you should have the right amount of cover and the correct type of policy.
- Carefully consider your premium paying capacity and what you’d need at the end.
- Quit smoking and you might get much cheaper insurance rates.
- A healthy person will find it easier and cheaper to get insurance. So focus on living a healthier life.
- SWITCH immediately if your old insurance is expensive. With the introduction of many online term insurance plans in India, insurance costs have come down substantially.
- ALWAYS answer questions accurately – your claim might be rejected if you have given wrong information to the insurers.
- DO NOT BUY riders without good advice. These carry a lot of hidden things. Stick to basics.
- DO NOT go for very long duration covers. There is no point getting insured till 75!
So get yourself covered NOW. Even before you start thinking of tax savings or ‘wealth creation”, first job should be to protect yourself and your family from the uncertainties of life.
So I’d recommend you to ACT NOW. Never leave anything to chance.