An important part of planning your finances is that you need to ensure that your family has enough financial support when you are not around. Term plan happens to be the most trusted means of ensuring this. As this plan has a proven track record of supporting the family of the deceased, many adopt it without going into much detail. Every individual has different investment requirements, so opting for any policy recommended by an acquaintance will not suffice your needs. You need to decide on a plan by checking your preference for the plans in the market.
But before you choose the term plan, there are a few things you need to do –
Think about the sum assured you want –
The first thing you need to do is to decide the sum assured you need. The sum assured is handed to your family in case of your untimely death to help them cope with their financial needs. So while deciding this amount there are a number of factors you need to take into consideration. Understand the reason why you need the policy, is it to help your family manage the daily needs after you, pay of a loan, education of your children etc. Also, consider the rise of inflation.
Consider the time frame for the policy –
A term plan can be availed for a period of 10, 20 or 30 years. You need to consider the duration while buying the policy. In case you are availing the plan at an early age then you can opt for a longer period. In fact, plans taken at an early age give you a longer duration for investment for a high cover at a lower premium. Plan to settle the term plan duration around your retirement age, by this time you’d be free of most of your financial liabilities.
Check your affordance –
When you invest in a plan, it is important to make sure your current cash flow is not affected. The premium of the policy you chose needs to fit your pocket. The premium amount is decided by the sum assured you choose, your age, the coverage you need and the number of years you take the plan for. Hence, it is advised that you buy the policy at an early age. When selecting a plan, avoid being over or under insured. Being over insured will cost you heavy premiums and affect your cash flow in the present. And under insurance will not give your family the required financial security. Also, do not finalize a plan as per the premium cost, factor in the benefits it offers.
Selecting a provider –
Choosing the right provider will ensure you get the benefits of the policy as promised. So, research on the different products and their providers in the market. Check their features and benefits. Most importantly, check the claim settlement ratio of the provider. Make sure it’s not a lengthy process entailing a lot of documentation. Choose a Term plan that fits your needs perfectly.
Essential tasks to do before deciding on a term plan