How to Select the Best Term Plan for Yourself? - HDFC Life

Term plans are a simple form of life insurance that enables you to secure a high life cover at the minimum cost. It is a pure life cover, which has no investment related advantages. Under this policy, a person is covered against death for a certain period or term. It is the cheapest form of life insurance and the premium is quite low as compared to other types of insurance covers. However, there is a variety of term insurance plans available in the market, hence choosing the right one can be quite confusing.

Here are a few tips to help you choose the right one:-

1. Human Life value: -

   the human life value includes the income of a person as well as, liabilities like loans. The main purpose of a term insurance plan is to cover the financial needs of your dependents in case of your death. Hence, you must make sure that the life cover amount is adequate.

2. Reputation: -

   It is necessary to do a background check on the insurance company before you buy a term insurance plan. When you choose a company with a good reputation, you can be assured of expertise in the handling of funds that will eventually lead to appropriate returns on your investment. So make sure to check the ratings of a company on any financial rating websites.

3. Claim-settlement ratio: -

   Another method to judge term insurance plans, is determining its claim-settlement ratio. This ratio indicates the number of settlements that have been made per 100 claims. Go for companies with a high claim-settlement ratio as a higher ratio implies that the company has settled most of the claims.

4. Enhanced insurance cover: -

   The enhanced cover feature is offered by most term insurance plans. If you opt for an enhanced insurance cover, you have the flexibility to enhance life cover as per your requirement at different stages of life. For example, in the event of marriage, the policy cover can be increased by 50% and in case of becoming a parent; it can be increased by 25%. This allows a policyholder to enhance his policies as he goes through the various stages of life.

5. Riders: -

   Riders are add-on covers that can be used to enhance your protection further by covering additional risks. For instance, if you choose a critical illness rider, you will be entitled to receive the sum assured on being diagnosed with a critical illness. This will be in addition to the death benefit. Hence, you can choose from a variety of riders as per your needs and augment your policy protection. Some of the most common term insurance riders include critical illness, waiver of premium, disability cover, loss of employment cover etc.