Term Insurance buying guide for not so financially active people

Insurance companies offer term plans that are now exclusively accessible on the web. These online term insurance plans are anything but difficult to purchase and a sure shot value for your money. You could get yourself a term cover at the click of the mouse.

However, buying term insurance is a lifetime decision, and this is the reason it shouldn't be done in a rush. There are numerous things which should be kept in consideration before purchasing the same. So, to help you with the hassle of buying an insurance plan, mentioned below, is the step by step guide for purchasing an online term insurance plan (even if you are a finance dummy):

Step 1: Evaluate Your Needs and Accordingly Choose Your Sum Assured

Term insurance must provide financial security to your family’s needs in your absence. Remembering this, decide the sum assured (cover amount) by evaluating your sources of income, number of dependents, existing obligations and liabilities, and the expenses incurred to maintain your family’s present way of life.

The basic thumb rule is having a term cover of around 10 times your annual income.

The term insurance plan should be adequate to cover the following: -

  • • Repayment of your liabilities or outstanding debt if any (e.g. car loan, home loan etc.)
  • • Once debt obligations are repaid, the term plan should provide enough monthly income to take care of all the living expenses of your loved ones
  • • Additionally, the term cover should also be adequate enough to meet your future obligations, like children’s education, marriage and so on

Step 2: Compare and Know Which Type of Term Plan Suits Your Needs

The premium paid towards buying the online term insurance will differ according to the cover term, sum assured (cover amount), your age, type of term plan, and smoking habits. Along these lines, to get the best deal on your term plan, an intensive comparison of quotes is suggested.

Additionally, decide if you want to go for term plan with basic life cover, or term plan with fixed monthly income, or a plan with increasing monthly income.

Step 3: Choosing the Duration of The Term Plan

Deciding the duration of your term plan is another vital consideration. As a rule, you should have term insurance for as long as you are working and supporting your family.

The premiums of the term plans increase with its tenure. You may be attracted towards insurance plans with lower tenures to save premium. In any case, this isn't desirable. Risk on your life will increase with age and in this way the term plan should cover you at an age when you are more vulnerable to medical problems.

For instance, if a 25-year-old purchases a term plan of 15 years rather than 30 years, he will save money on premium, however, his term plan will terminate when he is 40; when his health risk will be considerably higher.

Therefore, it makes more sense, especially for young buyers, to buy a term plan for the maximum tenure possible.

Step 4: Factor in Inflation

While age and duration are the key components to be remembered when you buy a term plan, don’t forget to consider the impact of inflation on lifestyle needs. To keep inflation from gnawing a significant share into your sum assured amount, it is prescribed to settle on a term plan by considering the swelling effect of inflation.

Step 5: Riders Can Enhance Your Term Plan, Know If You Want Them

Riders help upgrade the scope of protection provided by the term plan. Future Generali offers the arrangement of joining riders to your term plan, thus expanding the level of security. For example, we offer the ‘Accidental Benefit Rider’ alongside our term plan where you get extra insurance benefit in the event of your demise due to an accident.

Next Few Steps:

Once you have decided on a specific term plan to buy, the online portal would require you to fill in key information such as personal details, nominee details, PAN, medical and general health conditions. Provide correct and accurate information.

Once you input your details, the website calculates your annual premium. Using a suitable payment option, you can pay your premium and submit all the documents online.

The Bottom Line:

These are some simple steps to pick your online term insurance. So, follow them, create a quote and secure the future of your loved ones today.