Are you about to purchase term insurance? We present five elements to look for when making your choice.
People buying term insurance find that deciding to do is the easy part. The tough part comes next – choosing the right plan! However, you can make the right choice if you break down the process into simple steps. We present five steps to follow when buying the right term plan:
- Purchase the plan online.
Every person who has purchased insurance online knows the benefits of doing so. Not only does it make the research process easier, it also saves time and money. People buying term insurance online will find that it is cheaper – in the absence of an insurance broker handling the transaction, the insurer passes on the savings on broker commission to the customer. Apart from saving money, you will also save time by buying and renewing the policy online within minutes.
- Buy when you are young.
The younger you are, the more insurance providers will be happy to give you term insurance. Young people have less financial burdens and lower incidence of disease. This means that they are more amenable to making timely premium payments and they are low-risk candidates for the insurer. Also, the premium payments are lower for younger age groups. The older you are when buying insurance, the higher will be the premium.
- Know your requirement.
Your requirement will be determined by the current life stage, future needs such as children’s higher education, buying another house, increased monthly expenses for a bigger family, and so on. The policy tenure you choose will also be a factor. Remember that term insurance normally yields returns on the demise of the policy holder, thus the requirement must be anticipated accordingly. Also take into account future inflation and monthly expenses when deciding on the sum assured.
- Calculate the monies involved online.
People are flummoxed by the calculation of the sum assured, bonuses, premiums and tenure. Instead of entrusting the task to an insurance broker, simply use a term insurance calculator. The calculator accords real time computation of all the desired numbers within seconds. Insurance websites also offer term plan premium calculators which help one arrive at the calculation for the premium payable against desired sum assured. These figures are the closest approximation to the actual payments to be made, while some calculators give the exact figures.
- Look for reducing premiums and paybacks.
Some insurance providers have term plans that offer the opportunity of paying reduced premiums as time passes. Other term plans offer the benefit of returning the premiums paid if the policy holder survives the policy tenure. Apart from these, conduct your research about the benefits the policy offers. The policy document (available online) will give these answers.