5 Tips you need to know before buying Term Life Insurance Plan

Life insurance :

Finding life insurance that fits your needs and budget can be difficult without assistance, but it can be a crucial tool for financial planning. Remain calm. You can concentrate on the crucial elements of selecting an insurance that meets your demands by following a few easy steps.

The purpose of a life insurance policy is to provide protection against the possibility of passing away due to an illness that could be fatal, an accident, old age, or a serious health condition. As long as premiums are paid on time, it offers coverage or protection for the duration of your life, for a given term or period of time.

Depending on the conditions of the life insurance policy, a claim is paid to the beneficiary upon the death of the insured. To make sure your loved ones are financially secure after your death, it is essential to purchase a life insurance protection plan that meets your needs.

Here are the 5 things to consider when buying a term life insurance plan :

1. Determine the amount of term insurance coverage you require:

In general, your term life insurance policy should estimate the amount of money your family will require in the event of your unexpected death. Getting a piece of paper and starting to calculate the following is the easiest method to go about this.

First, multiply the monthly expense estimate for your dependant family by 150. the future inflation components multiplied by 150.
Two, Include all of your debts, including credit card payments, personal loans, and house loans.
Three, is to subtract all of your current liquid assets, which could be mutual funds, stocks, or FDs.
Four, include the costs you have budgeted for significant life objectives that are anticipated to occur over the next 15 years. such as your kids’ marriages or further education.
Five, Include the retirement corpus you wish to leave your spouse when they retire.

2. Establish the duration of your plan:

Knowing how much coverage you require and till what age you would need it is crucial. The policy can terminate before your financial responsibilities are fulfilled, thus the tenure shouldn’t be too short. Nevertheless, the tenure shouldn’t be excessively long, as this would result in an excessive premium being charged.

Finding the year that your liquid net worth—that is, the total amount of money you have invested in stocks, mutual funds, provident funds, and other assets after deducting your liabilities—will exceed the term life insurance coverage that we computed in the previous section is the best method for estimating the tenure of your term life insurance policy.

You should need coverage up until the age at which these two numbers coincide. After that, your family will have enough to care for you while you’re away.

3. Aim for the highest Peace-of-Mind per rupee premium:

Because consumers frequently place a high value on certain important intangibles when making decisions, we refer to Peace-of-Mind here rather than coverage per rupee premium.

These variables may include the insurance company’s stability or the policyholders’ perception of it while selecting a term plan. Term life insurance is a type of long-term policy that lasts for thirty to fifty years. Because of this, it is crucial that you be satisfied with the insurance plan you have chosen, which is based on both your impression of your insurance company and the premium you pay.

Pro-tip: Most insurance companies find that selling term life insurance plans online through sites like ETMONEY results in lower premiums than selling the policies in person at branches or through agents. Because they offer a premium advantage, purchasing term insurance products online is therefore always advantageous.

4. Select your accessories carefully:

Even if term life insurance plans don’t meet your needs, you should still give them some thought because they provide riders at a fair price.

There are four primary riders accessible:

Added protection against accidental death:
This amount would be paid to you in addition to the basic sum assured in the event that you pass away from an accident during the duration of the policy.

Coverage for critical sickness:
If the policyholder is diagnosed with a disease that the insurer has designated as a critical illness, they will receive a lump sum payment from the insurer.

Disability premium waiver:
Should the policyholder sustain a persistent disability during the policy’s term, all future premiums will be waived.

Premium waiver for critical illness:
During the policy’s term, future premiums will not be charged if the policyholder is diagnosed with any of the serious illnesses listed in the policy.

Two of the four riders have modest premiums: the waiver of premium for serious illness and the waiver of premium for disability. The most costly rider is the critical sickness coverage one. As a result, you must conduct thorough study to determine whether the extra benefits justify the premium amount. Moreover, carefully read the tiny print on every add-on because various insurance companies have varied policies about them.

5. Take a broad look at the claim settlement ratio:

Consumer attention is typically drawn to the claim settlement ratio. It shows how well the insurance business settles claims related to the policies. Consequently, 95 out of 100 claims that were reported to the insurance company were settled, as indicated by the 95 percent in the claim-settlement ratio column.

But here’s a word of caution. The ratio of claim settlements is just a suggestion. A corporation is considered to be exceptionally efficient at settling claims if its claim settlement ratio is greater than 95%. It actually doesn’t take long to determine who has a 98.5 percent ratio or who has 99. Instead of using the claim settlement ratio as a primary criterion for decision-making, you should use it as a filter.


A long-term agreement between you and your insurer, term life insurance will provide for your family’s needs in the event of your death. It is in your best advantage to take into account each of the five considerations covered in this article when selecting the plan that is ideal for your family.

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