Surplus funds for term insurance: your guide for right investment

Taking out a term insurance plan is one of the most credible ways of protecting your family's finances and future. It serves as one of the basic modes of life insurance and constitutes a system wherein the insurance company pays the financial benefits as a lump sum payout in case of the unfortunate demise of the policy holder and as per the terms and conditions mentioned in the policy. In case of survival of the policy term, no monetary or coverage benefits can be claimed by the policy holder or her/his family. Term insurance market is a booming segment in India and is quite popular for life insurance cover. The choice of a term insurance plan usually depends on three factors- the sum assured, the term of the plan and the age of the policy buyer.

A term insurance plan must be thought of as an investment for the safe and secure future of your loved ones and not as any sort of a liability in terms of the payable premiums. Therefore, as soon as you begin to have surplus funds, even if in the initial period of your career, you must duly opt for one so that in the long run, a significant corpus can be created for the betterment of your loved ones.

Following are the important factors to be considered at the time of purchasing a term insurance plan:

1. Take a timely decision:

   Time is of essence as taking a timely decision gives you the advantage of having sufficient period at hand for creating a strong fund value that can give you a stress-free present as far the financial security of your loved ones is concerned.

2. Take CSR into account:

   While choosing a term insurance cover, one of the most important factors is to choose an insurer who has a high CSR i.e. claim settlement ration. Claim settlement ratio is the figurative average of the claims processed by an insurance company in any given financial year and of represented by a percentage value. Higher the claim settlement ration, high is the probability of getting your claim processed if need be, without any hassles and other issues. Claim settlement ratio is the ratio of the number of claims received by an insurer and the number of claims settled by the insurer.

3. Consider inflation:

   Inflation is the general increase in prices over a period of time. Since term insurance is a futuristic platform, therefore, it is essential that you must consider the important factor of inflation. This allows you to accumulate a coverage amount that can cover all your requirements and help you fulfill your family's dreams after the period of accumulation.

HDFC Life offers HDFC Life Click 2 Protect 3D Plus an online term plan that offers due coverage benefits so that your loved ones can have a stable future, even in your absence.