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5 things to consider before picking the right term insurance plan for your family

Here's a handy guide that gives you step-by-step directions so that you pick the best protection for yourself and your family.

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The world is witnessing an alarming rise in the number of coronavirus cases. With over 2 lakh cases being reported each day, the global tally has now reached over 1.22 crore that includes more than 5.5 lakh fatalities, as of 10th July[1]. In India, the situation is growing grimmer as the country is now seeing a new high every day in terms of single-day spikes. The incremental rise in numbers has made it more important for people to adopt smarter ways of living and put more focus on their health.

These challenging times call for innovative measures that would not only protect us but also our families in case something unexpected occurs. Prevention is always better than cure, and staying home will help for sure, but that doesn't mean we shouldn't be prepared for any emergency that might arise due to the COVID-19 pandemic, especially when India is witnessing nearly 25,000 new coronavirus cases daily.

To safeguard our loved ones, the right path is to have a backup that would take the financial burden off them during such emergencies and ensure that money doesn't become a problem for them in the future. The best way to achieve this is to buy term insurance so that you get enough protection for them without burning a hole in your pocket.

However, before buying term insurance, it is essential to keep some factors in mind to decide what's best for you. Here's is a handy guide that gives you step-by-step directions so that you pick the best protection for yourself and your family.

Step 1: Checking the Company Details

Before choosing a term insurance plan, it is important to choose a reputable life insurance company. With several service-providers offering similar products, it becomes tough to decide which provider is reliable and offers the best services and a wide range of products.  Besides checking on the company’s age, it is imperative to check the Claim Settlement Ratio (CSR) of a life insurance company, which will give you a clearer idea of the customer service of the company.

Step 2: Checking the Claim Settlement Ratio

The Claim Settlement Ratio (CSR) indicates the percentage of claims settled by the insurance company against the number of total claims received. It is an obvious choice to go with an insurance company with a high CSR so that your family may not have to go through unnecessary inconvenience while getting claims settled.

Step 3: Choosing the right term insurance based on your needs

It is important to evaluate one's needs and requirements before deciding on a term policy. Broadly, there are three types of term insurance plans

Level Term Plan: This is the most common term plan where the sum assured is fixed throughout the policy tenure and the benefits are paid after the death of the life insured.

Term Plan with Return on Premium (TROP): This plan comes with maturity benefits where the total premium paid by the customer is returned if the person that has been insured survives the policy tenure.

Increasing term plans: In these plans, there is an auto increase in the sum assured annually while keeping the premium amount intact. 


Step 4: Considering future inflation

One key factor that is often overlooked when purchasing a term insurance plan is “Future Inflation”, or the future value of money. Factoring in inflation into the overall scenario will ensure that the term insurance policy stays relevant for the entire duration of its term.

Hence a user needs to evaluate his/her needs and make a decision as per his/her requirement. In case of any untoward incident, the term life insurance will benefit your family and secure their financial future during those uncertain, volatile times.

Step 5: Attaching riders to increase the cover

There are numerous advantages of going with an insurer that lets the customer add certain riders at a nominal cost to the basic policy and increase the coverage of the term insurance plan. These riders may include provisions such as critical illness, disabilities, and accident benefits. In short, the policyholder may choose to opt for select riders in their term policy to ensure better and more comprehensive coverage throughout the term.

As mentioned before, when it comes to picking the right term insurance, a trusted brand is recommended as it usually provides peace of mind to the policyholder. One such Company is Bajaj Allianz Life Insurance, one of the leading private life insurance companies in India, which has served millions of customers in the life insurance business.

The company’s customer service is evident from the high Claim Settlement Ratio, which is 98.02%^.  Bajaj Allianz Life also features a one-day claim approval~,   AAA (In) rating by CARE – Highest Claims Paying Ability$ and a solvency ratio of 745%* for the financial year 2020 (against the IRDAI-mandated 150%). This means that the life insurance company is in very good financial health.

In conclusion, it is crucial to take note of some important factors before buying a term insurance plan. Whether you are single, newly married, a young parent, or have retired parents, be financially prepared to help your loved ones lead a secure future.


Source:
1 https://news.google.com/covid19/map?hl=en-IN&mid=/m/02j71&gl=IN&ceid=IN:en
^Individual Claim Settlement Ratio FY 2019-20
~. 87% of non-investigative individual claims approved in one working day for FY 2019-20. 1 day is counted from date of intimation of claim before 3 PM on working day (excluding NON -NAV days from ULIP at Bajaj Allianz Life offices
$Complete definition of the ratings assigned are available at www.careratings.com and other CARE publications
*All figures are as on 31st March 2020

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