What is Term Insurance Plan and How to Choose One?
- The needs of one individual vary from the other. It is not necessary that if your best buddy has bought a specific plan then you need to also end up buying that. Your needs would surely be different from your friend. So before you opt for a term plan make sure to analyze if you really need a term insurance.
- Term Insurance plans become a necessity only if you are the sole bread earner of your family with number of dependents and you do not have sufficient assets to suffice if your income ends.
- Make sure that you keep in mind your age. Insurance need not be bought for the sake of it or because in future you may not qualify for getting insured as most insurance companies pitch products by telling you that at an early age you will have to pay low premiums and at an older age your premiums will increase so buy it now. Put it this way, the companies gain while you pay when you are young as your survival chances for a longer duration are far high which means you pay regular premiums for a longer duration of time as compared to older people. Do not get carried away. If you feel you need a term insurance buy it now, if not you may always be able to fetch a coverage for yourself at later age if you are willing to shell money from your pocket.
- Do not confuse term insurance with investment in terms of growth. You do not grow your money nor do you get entitled for any maturity benefits in case the period expires and you are still hail and hearty. It is just an investment to safeguard your dependents in the event of your unfortunate, uncertain and sudden death.
- Prior to opting for a term insurance it is important for you to evaluate your monetary conditions. As you need to pay a fixed premium for a definite time it is important for you to understand if you will be able to continue paying through the period or not. You need to check out all your liabilities and check if you can keep away that amount from your earnings.
- Also try to keep in view the future obligations that you need to fulfill before you plan to buy a term insurance. Your future obligations would help you calculate the amount that could possibly be required by your family when you are not around. So you may plan your term and cover accordingly.
- It is important to closely view the Cost-Benefit Ratio while you opt for your term plan. You need to analyze if the amount paid by you for buying the plan justifies the benefits being offered or not.
- Keeping in mind your health conditions may also help you in a big way while you go choosing for the best term plan for yourself.
- It is important for you to study the different versions of term insurance plans available in the market before you chose one for yourself. Following are few types of term plans that you may study, compare and then choose the best one that fits your needs.