How to Choose the Right Term Insurance Plan?

    No one can ever predict what the future holds for us and what our condition will be at a certain point in time. Thus, it becomes necessary to prepare for the financial safety of your family. Once you do this, you can live in the moment without worrying incessantly about securing your family’s future.

    There are various insurance products available today to prepare for unpredictable circumstances. These products offer several deliverables customised to fit your various requirements.

    Among these exhaustive varieties of insurance products, term insurance plans are among the top contenders. In such plans, the policyholder does not receive maturity benefits if the insured amount is not used within the pre-defined term. However, in the event of an unfortunate circumstance, term insurance provides the policyholder’s family with life cover and financial stability, as regards the policyholder’s nomination and realisation in the fixed tenure.

    Read further to know more about what term insurance is and how to choose the right fit for you:

    1. Go for Insurers with High Claim-to-Settlement Ratio

    It is critical to know the monetary reimbursement plan first-hand before opting for term insurance. Check whether the plan has a good claim settlement process in place, using its claim settlement ratio. If the claim settlement ratio is high, it means that the policyholder’s family has a greater scope of getting the entirety of the total sum assured.

    1. Check the Ratio of Solvency

    The ratio of solvency helps you know the organisation’s capability to pay their long-term loans along with interests. The ideal solvency ratio prescribed by the IRDAI is 150%. Your insurer must have a solvency ratio that is close to 150% and not too high either.

    1. Choose Riders for Comprehensive Coverage

    A term insurance plan provides benefits after the death of the policyholder. When choosing the plan, you can also opt for some other features that fit your unique requirements.

    Some policies have the option to get riders to grow your coverage and minimise your risks. The following are the benefits of a rider that you should look for:

    • Critical illness: This rider covers certain major diseases, viz. paralysis, cancer, artery bypass, heart attack, renal failure, stroke, transplant of any major organ and coma.
    • Premium waiver: This rider helps during situations that result in defaults by writing down premium payments for the future.
    • Disability cover: This rider cover helps you to have a safety net for your future. This insures you from any accidents that could result in disability, due to an unforeseen accident.
    1. Premium Cost

    After determining which term insurance plan suits you the best and if you require any rider benefits, knowing the premium costs is now the final factor.

    Do not settle for a below-average policy simply to shell out less from your pockets. The best way to know your premium costs is to use a term insurance plan calculator. This lets you know approximately what you might be paying monthly, depending on the premium tenure of your plan.

    1. Number of Members in your Family and your Income Bracket

    You must consider your total income, along with the total number of family members depended on you when opting for a term insurance plan. If you are single and living with your parents, your financial condition would differ from the financial conditions in a marital situation. Keep this in mind to choose coverage wisely. More so, this can help you plan your financial goals for the future.

    1. Consider Liabilities

    You might have a few liabilities like your vehicle, personal, home or business loans. Thus, you might want to undo the possible pressure of loan payoff that can fall on your family members when starting your future financial planning. It is of utmost importance to mention the total loan amount repayable by you.


    While it is a great idea to hear what experts and peers have to say, selecting a term insurance plan must always be based on your own independent needs. Do not think that it is one-size-fits-all when it comes to choosing a term insurance plan for you and your family. Do consider the above-mentioned points before opting for a plan. Get an estimate of your periodic premiums using a term insurance plan calculator. Always remember to read the fine print of your term insurance plan before finalising your tenure.