Insurance Regulatory and Development Authority of India has pulled up insurers for not highlighting the projected rate of return in their product benefit illustration, reported the Economic Times on November 24, 2015. The directive to disclose the rate of return “with equal prominence and font size, at the same place and in the same page” will come into effect from December 1, 2015. Now when you purchase a term insurance plan, you can know upfront what your benefits on maturity will be.
How Term Insurance Can Help Plan Your Finances
Synchronize Maturity Date with Your Responsibilities: If you are stressed about big responsibilities like sending your child to best colleges or preparing for a big fat Indian wedding, you should take a term policy that matures at the time when you will need the benefits the most. For instance, if your child is five years old, you should invest in a 12 year plan so that you will be eligible for the lump-sum payout by the time he is ready for college.
Choose Policy Terms as Per Your Goals: If you worries are more about securing your future rather than responsibilities that require large sums of money, the best term insurance plan for you will be one that has an extended payout period after the maturity. For instance, if you wish to retire early, you can choose your maturity date accordingly and after that you can receive portions of the sum assured on a regular basis.
Add on a Rider: If you are nervous about taking on a term policy because of the uncertainty regarding your health, you can add on a premium waiver rider that will waive off 100% of future premiums under the base policy if you are physically unable to work due to critical illness or disability. Or, on the other hand if you want to protect your family against an accidental death before the policy matures, you can also add on a rider to that effect.
Protect Your Family: If your worry is about how your family will be able to pay off your debts or to secure their lifestyle even in your absence, you can opt for a term plan that is available at very low premium but promise high returns. They will not be a burden to you in the short term, but they will ensure security in the long run.