Get Your Ideal Term Insurance Policy In 10 Simple Steps – A Comprehensive Guide

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Term insurance is the most basic investment option available at a reasonable price. We are discussing the process to avail an ideal term insurance plan in a few simple steps, in this post. Read on!

A term insurance is a simple and pure insurance policy that offer coverage to a policyholder during the tenure of the plan in return of a regular premium paid by the policyholder. In return, the insurance company provides the nominee of the policyholder a death benefit in case of demise of the person during the policy term.

A term plan is a low-priced policy that can be availed by anyone to have maximum coverage. Let us take a look at the 10 easy steps that can be used to get your ideal term plan. But first, let’s starts with what are term insurance policy benefits.

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Benefits of Buying a Term Insurance Policy

  1. Monetary Protection – The most important thing about term plans is that they provide financial protection to the loved ones of the policyholder under situations when they need the monetary security the most. Term plans ensure that the family of the policyholder has a steady source of income in the event of his/her sudden death and hence safeguard their financial future.
  2. Cost-Effective Premium – Term insurance offers a considerably good sum of money at an easily affordable premium rate.
  3. Added Coverage – Most term plans offer rider facility to policyholders to cover them from critical illnesses. These riders allow the insured to get lump sum amount for the treatment of certain critical illnesses enlisted under the term plan.
  4. Tax Benefits – In addition to other benefits, the option of tax exemptions as per the income tax regulations of India can also be availed by policyholders under term insurance plans.

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Easy Guide to Buying Your Ideal Term Plan in 10 Simple Steps

With a plethora of options being available in the market, it becomes quite difficult to select the best plan that would suit you well. Hence, it is essential to do adequate research before buying a plan. Here is a checklist that one can consider at the time of selecting a term insurance plan:

1. Consider the Coverage

One of the key aspects to consider while buying a term insurance policy is the coverage. How much coverage an individual requires as life cover might vary from person to person. The annual income of the policyholder is the main determinant that decides the coverage amount.  Other things to consider include any financial obligations like loans, debts etc. that the insured is liable to pay. These considerations would ensure that his/her liabilities do not bother family members later when the person dies.

2. Tenure of Policy

Like the coverage amount, the tenure of the policy is also equally important. You must plan the tenure of the policy in a way that it suffices your needs till your dependents become financially independent. So, there is no use in opting for a term plan that extends for a longer duration unnecessarily as it costs higher premiums. You may look for a tenure that lasts till your retirement or till your children are settled with jobs.

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3. Add-on Riders

Most term plans are available with add-on riders. So, the policyholder can utilize these riders to enhance their policy coverage. These riders allow the policyholder to add extra coverage to their term policy if they want later on in life.

4. Additional coverage

If you buy a term plan with minimal coverage initially as per your income and coverage requirement, you may enhance it later when you receive a raise in income. This way, the sum assured can also be enhanced to deal with the rising inflation.

5. Obligations and liabilities

Planning to invest in a term plan at the right time of age is also important.  Generally, a term plan must be bought early on in life to obtain it at a reasonable price. Accordingly, the coverage should also be decided. This will make sure that your liabilities are taken care of and you also have enough for your spouse and children to live comfortably in your absence.

6. Right Insurance Company

To make sure that you buy your term plan from the right insurance company, it is important to check the Claim Settlement Ratio (CSR) of the insurer. If your insurer has a higher CSR, it means that the chances of claim settlement by the company is better as compared to companies with a low CSR.

7. Nomination

Informing and updating your beneficiary about their nominee status is also important so that they know what they are likely to do in the unfortunate event of death of the insured.  If the nominee is not a legal heir, the claim might be disputed. Legal heir includes relatives such as parents, spouses, and children. Hence, updating the nominee details is necessary to avoid issues at the time of claim settlement.

8. Free look period

Going through the terms and conditions of your term plan is very important. However, you may also note that you can avail the 15 days free look period of policy cancellation that can be used to cancel the plan you have bought if you are unsatisfied with it.

9. Know Your Customer (KYC)

Going through the process of KYC by submitting the required documents is also important because it helps the insurance company to verify the identity of the customer. The documents required for KYC include Aadhar card, PAN card, address proof, etc.

10. Claim Settlement Process

Last but not the least, it is important to educate your nominee or the beneficiary of the policy about the claim process so that he/she can raise it well when the need arises and when you are not around to help.

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To Sum Up

It is always better to invest in a term insurance policy as it allows financial security to your loved ones when you are not around to care for them. However, just picking up any policy may not be a good decision. Rather, it is important to research thoroughly and compare plans available before making an informed decision about buying the best term insurance policy in India.

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FAQs: 10 Simple Steps To Get Your Ideal Term Insurance Policy in 2023

How do I decide how much term insurance I need?

As per the rule of thumb suggested by insurance experts, the term insurance coverage of an individual should be around 10-15 times of his/her annual income currently. So, accordingly, one can calculate the amount to invest in term insurance.

What is a Term 10 policy?

A Term 10 policy is a term insurance plan where the premium amount to be paid is level for 10 years. These term policies are likely to be least expensive as the cost under these plans are level for 10-year-period.

What happens at the end of a 10-year term life insurance?

When the 10-year life insurance period concludes, the policy period for fixed premiums expires. And if the policyholder outlives the policy, the nominee receives no death benefit and at the same time no maturity is paid.

What is the ideal term for term insurance?

Usually, most people procure the coverage of term life insurance until they are 60 years old or for lifetime. Depending on your age of buying the plan and your requirement in terms of dependents, debts, loans and so on, the ideal duration of a term plan can be chosen. 

How Long Does It Take to Acquire a Life Insurance Policy?

Once the proposal of a life insurance policy is submitted, it takes around two weeks or 14-15 days for the policyholder to receive the policy bond. There is a free look period of 15 days from the date of receipt of the policy that comes with every life insurance plan.

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Feb 21, 2023
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PayBima Team
PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.

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