Every responsible individual wishes to save enough for his family to ensure they are financially secured even in his absence. But with the inflation on a high, managing savings and expenses prove extremely difficult. This is why investing in a term insurance plan is the most sensible thing to do. It offers you a systematic plan to save for your family and ensure they are well equipped even when you are not around.
There are several plans in the market; the baffling variety can trick any consumer into buying a policy that may not be the perfect fit for him. Here are a few tips that will help you when buying term insurance plan –
How much cover do you need
The needs of every individual differ as each has different lifestyle and desire in life. Hence the amount of cover you want will also differ. Deciding the sum assured is the most important thing to do when buying a term insurance plan. If you opt for a higher amount you’d be unnecessarily paying a huge premium and if you opt for a lesser amount, you’d be under insured. You need to think of the reason why you want the cover. Is it for the education of your children or to manage the daily expenses or to cover up a mortgage loan? It is advised that you consider an amount equivalent to 5-10 times your annual salary.
Mostly policy holders tend to live longer than the term insurance plan they opt for. This is why you need to choose a longer term at the very start. In case you wish to continue the policy by means of renewal or buying a new policy you will be charged a premium amount higher as compared to the previous one. While buying a policy you can choose a period to last until the time you feel you’ll be free of most of your responsibilities.
Consider the ever rising inflation
The constantly rising cost of living cannot be ignored when you select an insurance cover. An amount you feel is enough for your needs now may seem pretty small a few years down the line. Hence, have a rough estimate of the inflation rate when selecting the sum assured or you can also opt for an increasing term insurance plan under which life cover keeps increasing.
These are a few tips by which you can easily choose the right term insurance plan to secure your future.
Smart tips on buying a term insurance plan