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Top Secrets to Help You Choose the Best Term Plan

August 04, 2021


The coronavirus pandemic showed us just how unpredictable and uncertain life is. Nobody knows what will happen next, but we need to prepare ourselves and our finances for every possibility. A term insurance policy is an essential component of every good financial plan. Term policies provide your family members with financial security when you are no longer around to provide for them. There are many players in the market offering these policies. So, how do you choose the best term plan for your family and your needs? Let’s take a look at some well-kept secrets that can help you make the decision:

Understand Your Human Life Value

It is very difficult to put a price on a person’s life. No amount of money will ever replace you, but it can help your family financially. To find the best term plan for your needs, you have to think about how much money you need to provide. If you’re the sole earning member, the sum assured amount of the policy you choose should be at least 10 times your salary. So, if you earn INR 8 lakhs per year, your sum assured should be at least INR 80 lakhs. You also need to consider your debts. Do you currently have any loans or other financial obligations? Let’s assume you also have a car loan valued at INR 5 lakhs. Ideally, your sum assured should be more than INR 85 lakhs. Opting for a higher sum assured will ensure that your family can maintain their standard of living even after you’re gone.

Find the Right Riders

Term insurance riders are optional add-ons that can increase your overall cover. You should always opt for critical illness, accidental disability and premium waiver riders. Let’s take a look at why these are important. A critical illness like heart disease or cancer requires a lot of medical treatment. Apart from the high medical costs, you might also end up losing some income as you’re unable to work while you recover. With this rider, your term policy will provide you with a payout after you are diagnosed with a covered critical illness. The money you receive could help cover your medical costs or even replace your lost income. The disability rider provides a similar financial safety net if the insured is left disabled after an accident. Finally, the premium waiver rider is essential as it keeps your policy going even if you lose your job and cannot afford to pay your premiums. Finding the right riders for your family will help you decide on which policy is the best term plan for your needs.

Buy Your Policy Online

Term plans are already known for being the most affordable life insurance product in the market. But, there’s a way you can make it even easier on your pocket. Opting to purchase a term plan online will likely lead to lower premium payments and a more affordable policy. When you purchase a plan offline, there are a few additional charges, such as an agent’s fee, which gets passed on to the customer. In today’s digital world, you can easily buy the plan directly from the insurance provider’s website. All the best term plans have online purchase options, so you don’t have to worry about missing out on a better policy.

Revise Your Sum Assured Regularly

People often make the mistake of keeping their sum assured amount the same for the entire policy term. As you go through life, your financial needs are likely to change. Let’s say you purchased a plan when you were single in your late 20s. Your only financial liability was a bike loan, so the term plan would help your parents pay off any outstanding debt. After 5 years, you might get married and start a family. Now, you have more people depending on you for financial help and support. So, you should increase your sum assured amount to meet your evolving financial needs.

Check the Claim Settlement Ratio

Many individuals only compare the features and benefits of the best term plans. One important factor they do not look into is the company’s claim settlement ratio. The ratio will tell you what percentage of claims the company settles every year. Always opt for insurance providers who have very high claim settlement ratios. By doing this, you increase the chance of your valid claim being settled.

Finding the best term plan in 2021 doesn’t have to be a challenging task. You need to evaluate your finances and understand what sum assured amount you require. Next, have a look at the plans available online and find ones that offer the riders you’d like to purchase. Finally, check the claim settlement ratio and make the payment. Don’t forget to evaluate your finances regularly and update your sum assured amount.

Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Author Profile Written By:
Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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We at HDFC Life are committed to offer innovative products and services that enable individuals live a ‘Life of Pride’. For over two decades we have been providing life insurance plans - protection, pension, savings, investment, annuity and health.