After reading my last article 4-Baby Steps Towards Financial Plan, we all now know the importance of Term Plan in our life. Why we should keep insurance and investment as a separate entity? Why we should only go for simple term plan instead of money back policies?
In this article, I will tell you some of the important points which we should remember while buying a Term Plan.
a.) Premium Vs Feature: Many people fall prey with the cheapest premium. If you search on the internet, you will find every company is claiming that they have cheapest premium policy available. Surely, you can compare all the policies premium but dont fall in prey with that. You must check claims settlement record, service parameters and product features of these companies as they vary much for each company. First of all understand your requirement and then select the term plan.
b.) Coverage: To calculate approximately how much coverage you should take, you need to review your family needs which may involve age, lifestyle, requirement of each individual person etc. You also need to take care your annual income and it is normally suggested that one should go for the 10 times of his or her annual income. For Ex. if your annual salary is Rs. 5 Lakh you can go for Rs. 50 Lakh coverage and so on, at least in financial terms for certain years your family can sustain them self from sudden death of earning person.
c.) Tenure: This is a very important factor for determining the term plan. It should be in line with you needs. Probably the younger person should go for the higher term than the person who is older.
d.) Break in policies: It might happen that you are not happy with your existing policy provider and you choose to close it; further after some time you decide to take a new policy which is in line with your needs. Its a good thing that you are selecting a new policy according to your needs but think of the gap between the closing of the old policy and taking a new policy. If something happens to you in between this time period; then what??? Therefore whenever you choose to cease your old policy- you must first select and take the new policy and then close the older one. Its the safest way to go about it.
By following the above mentioned points you can surely select the best Term Plan which can be helpful for your family. I hope you would surely get one which suits you the best. As Eminem Said, “The Truth is you don’t know what is going to happen tomorrow. Life is a crazy ride, and nothing is guaranteed”.
If you enjoyed reading my blog, please subscribe to my blog to keep yourself updated.
Happy Investing!!
