What are the key factors to be considered in term insurance?

Researching is a powerful tool. And, when it comes to financial matters, both doing research and having knowledge play a vital role. Now since term insurance has gained immense popularity, knowing about some important factors before purchasing this policy is a crucial thing to do. This is because as term insurance policy demand is increasing so is the competition within the insurance market.

Term insurance is more than just a financial product as it keeps your family financially secure after you. It can’t help to cover the emotional loss your family will face, but it will secure them financially in the future.

Well in this blog, we have gathered a list of factors that you should consider before buying the term insurance: 

● Plan for sufficient Insurance Cover

Whenever you plan to purchase a term insurance plan, the 1st step should be to plan for adequate coverage needs. If you are having any difficulty figuring out the adequate amount, you can always take professional help. Generally, financial advisors believe that a term insurance plan bought with a death benefit should be of at least 8-10 times your gross annual income.

Not only this, the coverage you are planning to take should cover all the liabilities that you have, your living expenses and should also consider your future expenses. These could be anything from a child's education plan to their marriage. So at least your coverage should cover 30 years of your life.

● Policy Tenure

When you buy a policy you would want to stick to it for a longer period, at least till you’re working. This doesn't mean that your policy tenure stops at 55 years of age or say 65. Since the competition is too high, many companies also provide you with a term insurance policy coverage up to 100 years.

● Claim Settlement Ratio of Insurance Company

This is the most important factor out of the lot as the claim settlement ratio gives us an overall number of claims that the insurer has approved.
This is further divided by the overall number of claims it has received.

This ratio will give you an idea of how many claims this firm has settled, and accordingly, you could compare it with other insurers and buy from the best. This data is released every year by the IRDAI (Insurance Regulatory and Development Authority) stating the claim settlement ratio of insurance companies in India.

It is always better to go with a company that has settled higher claims than the others.

● Insurance Rider

Term Insurance Riders provide you with the entitlement of availing supplementary coverage.
Here are some riders to consider:

- Accidental Death Benefit Rider

- Critical Illness Riders

- Income Benefit Rider

- Waiver of Premium Rider