Term Insurance is a traditional life insurance policy that provides the much-needed financial protection to your family in case of a casualty. However, if the insured person survives throughout the policy term, the policy terms and benefits remain null and void, as it only offers death benefits to the family in case of accidental demise of the policyholder. As it is the most affordable life insurance cover in the market, the multiple choices tend to confuse you.
Nevertheless, until now buying the term insurance was never that easy. There are insurance aggregators that help you with the buying process by suggesting the right plan through online comparison. However, to ensure the right term plan, you would have to be careful about certain buying aspects.
Here the punch line is- before buying identify your needs, compare insurance companies, evaluate based on the key features and buy!
By saying that, here are some of the key aspects that affect the sum assured and premium of a term insurance plan:
Key aspects affecting term insurance premium
The key aspects that have a direct connection to term plan sum assured and premiums are:
- Age of the Insured: Age is the sole aspect to consider not only in life insurance products, even in general insurance as well. Insurance premiums tend to vary at different stages of your life. So, the higher the age, the higher will be the premium. Because, with age, you are prone to more life-threatening illnesses, hence the risk-appetite is higher. Hence, the insurance premium for term insurance at the age of 20 or 25 will be much lower than it is at the age of 40 years or more.
- Gender: the Life expectancy of an individual plays an important role in deciding the insurance premium or sum assured. And women are believed to live longer than men, hence the insurer offers a lower premium. Some companies offer discounts on various products for women.
- Annual income: Usually, the sum assured offered in a term insurance plan is more or less 15-20% of the yearly income of the insured.
- Nature of Job: Considering the risk associated with the job, insurance premiums differ. Higher risk-jobs draw lead to a higher premium. Hence, if we compare term insurance premium of a fireperson to a person with a desk job, it will be always at the higher side.
- Smoking Habits: Smoking habits also adds to the insurance premium. A smoker tends to pay a higher premium, where the non-smokers can avail a plan at a lower price.
Top affordable insurance plans
At times, plenty of insurance options might leave you in a state of confusion or you may end up buying a plan that eventually proved to be insufficient. That’s why you should compare the plans on the basis of their offerings and premiums. In this regard, here’re some of the affordable term insurance plans to be considered:
Aspects to consider while comparing
If you are buying a term plan online, the comparison is the mantra to ensure the right policy. In this regard, below are the aspects to be considered:
- Claim Settlement Ratio (CSR)
Claim settlement ratio plays an important role while choosing a term plan. While comparing the various plan, you should always look for the claim settlement ratio of the insurer, which indicates the number of claims settled by the insurer in a financial year, out of the total number of claims received. It is advised to go with the one with a higher CSR rate.
- Riders to choose
Riders are the additional cover that boosts the basic cover. In case of term insurance, you can opt for personal accident cover or other related riders as per your requirement. Select a plan with maximum riders to aid to your requirements.
- Premium rates
Comparison should be done basis on the premium options offered by different insurance providers. However, the premium should not be your sole concern. Some insurer may offer a higher premium but the coverage would be extensive as well or vice versa. So, make sure you go for a plan that is affordable as well all meets your every insurance need.
- Deciding sum assured
Sum assured is decided based on your annual income. However, there are some other factors to be considered as well. Outstanding debt or rising inflation, the flow of income to take care of your family in your absence etc. are some of them.
To sum up!
The growing inflation has made it almost compulsory to secure the future of your family. It is a must if you are the bread-winner of the family. Have you ever think about how your family would survive in your absence if there is no other earning member? Life is uncertain and preparing for the untoward is the only solution to this. Hence, term insurance comes in handy in this regard, which offers the much-needed financial protection to your family in the hour of need.