A definitive guide to term insurance plans in India

The kind of life insurance that ensures coverage of the insured over a certain specified number of years or terms is a term insurance plan. Term insurance policy is active or in force only upon the demise of the insured within the time period specified in the policy. It is hence, considered to be the most cost-effective and pure risk cover of life insurance. These plans are required to provide financial security to the family of the deceased and are also capable of catering to the future needs of the family members of the deceased.

How to choose a term insurance plan

The below-mentioned points are to be noted before a term insurance comparison

  • Premium Cost –

When it comes to cost its a major concern for most of us, but it is also to be kept in mind that the other factors are not to be compromised to save the cost. The insured can also pay the premiums on a monthly basis in order to divide the premium cost into small instalments. Therefore we should also keep in mind that the premiums are allowed for deduction under Section 80C of the Income Tax 1961.

  • Duration of the policy –

It is always beneficial to choose the longest term available to the insured. If the plan allows a term of 30 years, then it wouldn’t be wise to settle for anything less than that. The duration of the policy should be chosen on the basis of the purpose of the policy, which is to provide for the family of the insured in his/her absence.

  • Additional Rider Benefits –

Rider benefits are to be carefully accessed in order to avail the benefits to the insured in case of an accident leading to a permanent disability of the insured. The company will provide a certain amount of financial support agreed by both the insured and the company. In order to choose a suitable term insurance one should always take into account the different accidental rider benefits availed by the company.

  • Claim Settlement Ratio –

This ratio is concerned with the total number of cases filed in a particular year divided by the total number of cases actually settled by the insurance company. The higher the term insurance settlement ratio is easier it is for the family of the insured to claim the insurance and continue their life comfortably. Therefore, it is always necessary that the insured always chooses a company with the highest claim settlement ratio for a secured future of the family of the deceased.

  • Critical Illness Cover –

Death of the insured may not be the only reason to cripple the family financially. That is the reason there are critical illness covers to ensure if the earning members of the family suffer from a critical illness such as cancer or brain surgery in which case the diagnosis is very expensive. So, the company has to be provided with the medical documents confirming the diagnosis. Premiums of the critical illness cover are also eligible for deduction under Section 80D of the Income Tax Act 1961.

  • Solvency Ratio –

Solvency ratio calculates and determines the fact that if the company chosen by the insured will be financially capable of settling the claim in case the need arises. It means the ratio helps to evaluate the financial viability of the insurance company. For instance, in case of a war or a natural disaster or collapse of the economy,  the company will get many claims together and then, in that case, if the company will be capable to settle all the claims.

After evaluating the term insurance comparison on Turtlemint and considering the above-mentioned parameters, we should compare all the policies both online and offline and hence make an informed and justifiable choice to secure the future of the insured’s family.

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