Are you looking for the best term life insurance plan to safeguard your family’s future? Do you want to know the essentials before you invest? You’ve come to the right place! With hundreds of options available in the insurance market, it’s essential to understand the intricate features that make a plan stand out.
A well-chosen term life insurance policy not only assures financial security but also peace of mind. Let us enlighten you with the top 7 features to look out for when considering a term life insurance plan. This will ensure that you make an informed decision that aligns with your family’s financial goals.
Things that Make a Term Life Insurance Plan the Best
By carefully considering the following factors, you will understand what truly makes any life insurance plan the best. Moreover, you can find a suitable plan according to your specific requirements and objectives. Here we go with the 7 characteristics of the best term life insurance plan:
- Adequate Sum Insured
The sum insured, or death benefit, is the amount the beneficiaries receive upon the unfortunate demise of the policyholder.
Hence, ensure it’s sufficient to cover your financial responsibilities. A common guideline is to choose a sum insured 10-15 times your annual income.
- Competitive Premium
The premium is the amount you pay to maintain your policy. Compare premiums from multiple insurers to ensure you’re getting the best value. Factors like your age, health, and the policy term influence the premium.
- Flexible Term Options
Term life insurance plans offer various terms, from a few years to a lifetime. Select a term that aligns with your goals. For instance, if you have a 25-year loan, a 25-year term plan would be suitable.
- Renewal Options
Some plans offer renewal options, allowing you to continue coverage after the initial term ends.
However, the premium may increase. Consider your long-term needs when evaluating renewal options.
- Essential Riders
Riders are additional benefits that can enhance your term life insurance coverage. You may consider some of these mentioned below:
- Accidental Death and Dismemberment (AD&D): Pays a lump sum if you unfortunately pass away or suffer a loss of limbs due to an accident.
- Critical Illness Rider: Offers a lump sum if you are suffering from a critical illness mentioned in the policy.
- Waiver of Premium Rider: Waives your premium payments if you become disabled.
- Return of Premium Rider: Guarantees a return of premiums paid if you outlast the term of the policy.
- Incontestability Clause
This clause states that after a certain period (usually two years), the insurer cannot contest the validity of the policy.
This remains true even if the insurer discovers misrepresentations in your term life insurance application.
- Claim Settlement Process
A smooth and swift processing of claim settlement is crucial in times of need. Research the insurer’s claim settlement ratio (CSR) for prompt and hassle-free claims. Look for reviews and testimonials from previous policyholders.
Additional Points to Know When Securing an Insurance Plan
- Policy Ownership: Determine who will own the term life insurance policy. This can be you, your spouse, or a trust. The owner has the right to make changes to the policy, such as naming beneficiaries.
- Beneficiary Designation: Clearly specify your beneficiaries. You can name primary and secondary beneficiaries. Consider using trusts to ensure the death benefit is disseminated as per your wishes, especially if there are minor children involved.
- Grace Period: The grace period is the time you have to pay your premium after the due date without the policy lapsing. Ensure the policy includes a sufficient grace period to avoid unintentional lapses.
- Tax Implications: Understand the tax implications of term life insurance. In general, the death benefit is received tax-free by your beneficiaries. However, the death benefit may be subject to income tax if you purchased the policy through a qualified retirement plan. Consult with a tax advisor for added guidance.
- Riders: Beyond the standard riders mentioned earlier, consider options like accidental death and disability benefits, critical illness cover, and terminal illness benefits.
- Considering Your Health and Lifestyle: There is no second thought about how your lifestyle and health impact your premium. Individuals with pre-existing health conditions or risky lifestyles may face higher premiums. However, some insurers offer options for individuals with health issues.
- Understanding Exclusions: Keep check of any exclusions stated in the policy. Some insurers may exclude certain causes of death, such as death due to pre-existing conditions.
- Evaluating the Insurer’s Customer Service: A good insurer should have excellent customer service. Look for reviews and testimonials from previous policyholders to gauge their satisfaction.
What’s the Next Step for Securing Term Life Insurance?
In addition to financial advisor consultations, choosing the right insurance company helps you get valuable guidance in navigating the best term life insurance.
Investing in a suitable plan is a proactive step to safeguard your family’s financial future. Interestingly, TATA AIA offers a range of term life insurance plans along with financial advisory services regarding the same.
Their plans incorporate all essential features of the best plan. They provide flexibility, competitive premiums, and a variety of rider options. Ready to take the next step?
Reach out to TATA AIA today for a personalised consultation and explore a wide range of term life insurance options available.