We all know the importance of a term life insurance policy. It helps you protect your family’s financial future. If something happens to you, the insurer will pay the death benefit, i.e., the sum assured to your family. They can use the amount to take care of their everyday expenses and be financially independent.
If you don’t have life insurance coverage yet, now would be the best time to purchase one. Buying a new term insurance plan in 2023 would be especially beneficial. The sooner you buy, the lower the premium will be, as the premium rates depend on the entry age. Apart from the premium, there are other vital factors you must consider to get the best coverage.
Let us look at how to buy the right term insurance plan in 2023.
- Choose the right coverage amount
The most critical step in buying a term insurance plan is knowing the coverage you need. If you purchase a term plan with a lower sum insured, your family may not have enough funds to take care of their needs, and they may face financial stress later on.
If you are unsure how to choose the right coverage, you can follow the thumb rule. Experts recommend that the sum insured of term life insurance must be at least 10-15 times your annual gross income. However, this is not a hard-and-fast rule. You must choose the right based on your liabilities, dependent members, other income sources, and family’s lifestyle.
- Be aware of the insurer’s claim settlement ratio
Few people understand the importance of checking the insurance company’s claim settlement ratio while buying a policy. The ratio indicates the number of claims the insurer has successfully made within a specific tenure against the number of claim applications received in the same period.
For example, if the insurer’s claim settlement ratio is 50%. It means the insurer has paid for 50 out of 100 claims. So, it is better to choose an insurance company with a high claim settlement ratio so that your family gets the compensation without any hassles.
- Don’t forget to add the nominee’s name
When you fill out the term life insurance application form, make sure to provide nominee details. It is better to choose your closest family members, like spouse, children or parents, as the nominee. If you purchase a term insurance plan under the Married Women Protection Act, you can be assured that the insurer will give the death benefit to your wife and children.
- Purchase riders
When you buy a term insurance plan, you must consider purchasing a rider or add-on. A rider is an additional benefit that allows you to protect against specific risks that are not covered under the standard policy. However, you must know that a rider comes with an additional cost. So, assess your needs carefully and choose only the necessary rider to get additional protection and yet keep the premium affordable.
Some of the standard riders most people buy with term insurance include–
- Critical illness rider
- Income benefit rider
- Premium waiver rider
Now that you are aware of the tips to purchase the right term insurance plan in 2023 do your due diligence, and get the best policy that suits your needs and budget.