One such fact about the existence of life that everybody hates to accept is death. Aside from the emotional turmoil, the death of the breadwinner of the family can bring the life of the family to a standstill. Death creates a void that cannot be filled, but to ensure the security of the family, one may always choose to make a term insurance policy in order to secure the lives of the family after one’s death.
Term insurance policies are there to provide the family of the deceased with financial support to carry on their lives even in their absence. There are many term insurance policies on the market these days, which makes it very difficult to choose the policy suitable for your family. Most term insurance policies have a built-in feature to convert into permanent life insurance policies, irrespective of the term of the policy or the health conditions of the policyholder. Few insurance companies also cover partial or permanent disability where the income of the policyholder is disrupted.
How To Choose And Compare The Best Term Insurance Policy
There are several kinds of term insurance policies available. It is not always wise to go for the cheapest option available. Instead, one should opt for a policy that caters to an individual’s own personal needs. Term insurance comparison can also be made through both online and offline modes to provide an individual with a maximum number of choices. Below are a few parameters to keep in mind before choosing term insurance policies.
Solvency Ratio
The solvency ratio of a company shows the financial condition and stability of the company. It provides a clear picture to the policyholder about the financial state of the company and, in times of need, whether it will be able to set off their claim by not going bankrupt. It helps the policyholder determine the goodwill of the insurance provider and, hence, make an informed and preferable decision regarding the policy.
Riders
Riders are meant to enhance the coverage and provide broader coverage to the policyholder, not only in cases of death but also in any unfortunate tragedy leading to permanent or partial disability of the policyholder, resulting in disruption of income for the policyholders. A policy that provides additional rider benefits is always considered a good option.
Premium
The premium of an insurance policy always plays a vital role in purchasing the policy. One can quickly get an idea of premium rates by checking and comparing them online. However, it is not always beneficial to go for the cheapest premium rates, as they may not match your requirements, and other relevant parameters may be compromised. It is preferable to choose a company that provides discounted premiums to non-smokers.
Claim Settlement Ratio
This ratio is an indicator of the number of claims settled by the company for every 100 claims received over a particular period of time. A higher claim settlement ratio makes a company more favorable and reliable in terms of other insurance companies in the market. The claim settlement ratio for all the companies is published by IDRA every year. Most insurance companies settle over 95% of their claims, and few even exceed that mark. One can also check and compare the claim settlement ratios of many insurance companies online.
Reliability
In the life insurance sector, the trust and reliability of the customers are essential for the company. As term insurance policies are a long term investment, it becomes very important for the policyholder to check the reliability and goodwill of the company so that you will not be left stranded by the company in case the company meets with any difficulties or has to shut down its operations. It is recommended for the policyholder to check the FICO score of the company to analyze its stability and reliability.
Inflation
When selecting term insurance, one must take into account factors like inflation. These policies are mostly taken for a duration of 10–20 years, and if during that time inflation hits the nation, it may erode the value of the currency, resulting in lower returns at the time of maturity. Therefore, it is advisable to consider the companies that offer an increase in coverage by 5–10% annually to offset and keep in line with inflation.
Policy Terms and Conditions
It is advisable for the policyholder to read the terms and conditions thoroughly before placing one’s signature in the dotted lines. This will enable the insured to be aware of the inclusions and exclusions under the plan and have knowledge about the minute details of the policy, thereby avoiding further future confusion.
The term insurance plan provides more comprehensive coverage at an affordable price. Therefore, it is crucial to consider the above-mentioned parameters before buying a term insurance plan for yourself. Smart people always decide before the storm, and so it is advisable that one buy a term insurance policy before it’s too late.