4 most important features to look for in your term insurance plan

Updated: Wednesday, April 30, 2014, 8:48 [IST]

Investment seems to be an easy thing to do initially, but it is later that you find it is not so simple to dispense your hard-earned money and allocate it to something risky.

Here we are talking about term insurance plan and yes, we are calling term insurance plan a risky affair. If you do not understand a term plan in and out before purchasing it, the same can prove to be a risky investment.

Any term insurance plan has a basic feature to provide financial convenience to the family in case of the unfortunate demise of the insured. Nonetheless, along with this you need to consider a few more important points. If you are searching for the best term insurance plan in India, you need to look in your policy documents and confirm that it contains these four important features.

Fixed premium amount

With lowest-possible price, term plans are also known for their fixed rate of premium for the entire term of the policy. But certain companies can alter this feature to provide some more facilities and increase the premium rate after a few numbers of years on the condition of the insured acquiring any health condition. You need to check the clauses related to premium in your policy documentation and verify that your insurer is not going to increase the premium rates on any condition.

Renewability

Increasing insurance literacy has made the younger generation conscious of the possible uncertainties of life, so many young people have embarked on the journey of term plan. However, what needs to be considered in these cases is renewability. The younger the person the longer should be his term plan.

You may opt for the term of 20 years, but if you are 25, you should have the option of renewability once your plan is on the verge of maturity. This will save you to buy an insurance plan at a much higher rate later in your life at your increased age.

The option to choose the frequency of payment

This feature gives you the liberty to choose the frequency for making the payment of a premium that is, whether you want to pay half-yearly or annually. Many times, an insured is not aware of this feature and makes the payment as stated by the middleman. You need to manage the fund twice in a year in case the payment is to be made half yearly whereas in case of annual payment, you need to pay the amount only once. Having this option will let you to pay as per your financial convenience. Do confirm the availability of this feature to make it easy for you to make the payment.

Convertibility

Affordability is the major factor for many people for choosing a term plan over the other regular life insurance plans. However, the situation may change in the future and you might prefer an insurance plan that has saving or earning component fixed in it. Keeping these points in view, one should opt for the term plan which has the convertibility option. Not having the convertibility option means continuing with the same plan even if you do not want to keep it or surrendering it to buy another plan at a higher cost.
Though a term insurance plan is bought keeping the period in mind for which you want the coverage, verifying the availability of the above mentioned features will let you convert your short term protection plan into a plan that is equivalent to whole-life insurance plan.

Needless to mention, a regular life insurance plan is more expensive than any term plan, but buying a term plan initially and converting it into a whole-life plan will minimize your investment on protection automatically.

To further level down your investment and make your plan the best term insurance plan in India you can choose an online mode to purchase. However, while doing that do not forget to consider the features mentioned to make your choice of term plan a fulfilling one.

The article is written by Mr Naval Goel, founder of policyx.com.

You can compare term insurance at http://www.policyx.com

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Greynium Information Technologies Pvt Ltd, its subsidiaries and associates. The author has made every effort to ensure accuracy of information provided; however, neither Greynium Information Technologies Pvt Ltd, its subsidiaries and associates, nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to buy or sell any kind of insurance product. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and the author of this article do not accept culpability for losses and/or damages arising based on information in this article.