In today's world, people are lured by different mediums to invest their money. Before making any financial decision, it is better to calculate the needs and the requirements of the individuals. If any miscalculation is made, then the investment decision will go wrong. So it is always better to make an investment decision after taking into consideration relevant factors into account.
People usually commit financial mistake by hurriedly investing in tax-saving schemes, just for the sake of receiving tax benefits. They do not pay much attention towards the risk coverage and the insurance needs at the time of investment. It should be avoided by all means, as life insurance is more important than mere tax benefits.
What is Term Insurance?
Term Insurance is a kind of insurance that provides coverage at a fixed rate of payments for a limited period. Once the period expires, the coverage at the previous price of premiums is no longer guaranteed, and the insurer must forego coverage.
In case, if the insured dies during the term of the coverage, then the death benefits will be paid to the beneficiary.
Premiums - Term Insurance Plan
Most of the insurance companies in India offer Term Insurance Plans. The Term Insurance Plans do not have any maturity value, and hence the buyer of these plans will choose for those plans which provide lowest premiums. From an investment point of view, the premium amount should be the last thing to look at and not the primary factor to make an investment decision.
Important Things To Keep In Mind Before Choosing A Term Plan
When To Buy Term Insurance Plan?
There is a common misconception, that only married people need insurance. The fact is life insurance is necessary for all the individuals on this earth who has financial dependents. It is better to have adequate life cover even for the unmarried people who have dependent parents on them.
It is better to buy term insurance at around 30 years of age. The premium amount will be less if the age is less and vice versa.
How Much of Money Should be Invested in Term Insurance?
It is one of the most important factors while making an investment decision, as one has to allocate the required funds for securing the life. To arrive at a realistic figure, it is better to use the available tools on the insurance companies website. It helps the investor to understand better, as the calculations are made based on the income of the investor. The devices will help the investor to decide as to how much he/she can invest based on the earnings of the individual.
Period of the Plan
The period of the investment plan is one of the essential factors. The tenure of the plan varies from one company to another. More extended the period means the premiums will be higher and vice-versa.
Type of Plan
Insurance Companies are offering term plans that have an option to increase and decrease the sum assured. An investor has to review the needs every five years before arriving at a final decision. A simple plan with the lowest premium will be sufficient.
Online Plan Or Offline Plan
An investor can buy term plan directly from insurance companies by visiting their respective company websites or through the policy aggregator websites such as Policybazaar and Coverfox.
Buying a term insurance plan through online has two benefits.
The cost of the plan will be much less if bought through online method. The term plan purchased online can be cheaper as compared with the offline version from the same insurance provider.
It is easier to compare the features, price, and availability of the policies.
Filling Up The Application Form
It is always better to fill up the application form by an investor himself rather than depending on the insurance agent. It will make the investor aware of the things he/she wants to know before they underwrite the insurance cover. One should disclose the family history, smoking habits - if any, current medical treatments - if undergoing presently, existing ailments and so on in the application form without fail.
It is one the important thing for the insurer. It is always advised to nominate a dependent by the insurer for term insurance plan, and the nominee must be aware of the insurance cover that you are about to buy and should be well aware of where the documents are kept. In the event of the unexpected death of the insurer, the benefits to the term plan will be entitled to the nominees of the plan.