One such fact about the existence of life that everybody hates to accept is death. Aside from the emotional turmoil, the death of the bread earner of the family can bring the life of the family into 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 the absence. There are many term insurance policies in the market these days, which makes it very difficult to choose the policy suitable for your family. Most of the term insurance policies have a built-in feature to get converted 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 the policy that caters to an individual’s own personal needs. Term insurance comparison can also be made through both online and offline modes to help 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 if it will be able to set off their claim by not going bankrupt. It helps the policyholder to 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 any unfortunate tragedy leading to permanent or partial disability of the policyholder resulting in disruption of income of the policyholders. A policy that provides additional rider benefits is considered to be a good option always.
Premium
The premium of an insurance policy always plays a vital role while purchasing the insurance policy. One can quickly get an idea of premium rates by checking and comparing it online. However, it is not always beneficial to go for the cheapest premium rates as they may not match your requirements and also 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 at a particular duration 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 of the insurance companies settle over 95% of their claims, and few even exceed that mark. One can also check and compare the claim settlement ratio 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 a 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 inflations hit 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 covers 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 about the policy and hence, avoid 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 buys a term insurance policy before it’s too late.
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