A term plan is the best and simplest form of life insurance, which offers life coverage to the policyholder. They charge a fixed premium payment for a specific time until the policy lasts. And if something unfortunate happens to a policyholder when the policy is active, the nominee gets the term plan benefits. By investing in the right term insurance plan, you and your family would get financial security and comprehensive life cover at low premium rates. But if you are unaware of the proceedings and how it works, you will need a guide. Don’t worry, because you will find that guide to help you have a pure term plan.

 

How does Term Plan Insurance Work?

A term plan is an agreement between the insurer and the life insurer. When purchasing a term plan insurance, the insurance company decides the premiums based on factors like death benefit amount and policyholder’s age and health. If any tragic event happens to you during the policy term, the insurer will pay a lump sum to your dependents which is fully tax-free.

The insurer also has the facility to give the benefit amount of term insurance as an endowment. This endowment plan is payable as a lump sum or regular monthly payment, or a combination of both if the nominee is a minor. Additionally, you would get extra benefits in case of disability or accident at a low price by adding riders to your term insurance plan.

How To Purchase Term Plan Insurance?

Term Plan Insurance is one of the essential investments that secure the nominee financially in case of the sad demise of the policyholder. This is one of the major term plan benefits. There are also other facilities in a term plan that make them desirable to the public. A new buyer or an existing policyholder looking for renewal must consider all these facilities and features to purchase the perfect plan. Below is the detailed information of those features to look for in a perfect and pure term plan.

 

Premium Amount

The best term plan will have the lowest premium amount and several modes of payment. The policyholder can choose to pay in a month, quarter, year, or a single time based on the insurance payment mode. Out of these, monthly premiums are the easiest to pay, but the more the duration between the payments more the discounts will be. These modes also help them ration money according to the budget allocated to the insurance. So always choosing a plan with a lesser premium than others will ensure that the current lifestyle remains unaffected. And having plenty of payment mode options will ensure that there are no lapses in paying the premium.

Sum Assured

Sum assured is the total sum of money the nominee will get in case of the sad demise of the policyholder. It is necessary to opt for a higher assured sum to ensure the financial safety of the nominee. It will help them meet the daily living expenses for the next few years or other purposes.

Riders

Ensure the insurer provides the term plan benefits to opt for rider covers. Riders are extra covers the policyholder gets from the insurance company. Currently, term plans provide only two riders: Accident relief rider and Permanent disability rider. These riders also have their assured sum and an extra hike in premium. But the final premium of the term plan plus the rider cover will always be lower than having two different policies of term plan and accident cover.

Insurer Profile

Choosing a reputed insurer will increase the chances of claim request approval. A potential policyholder can know the insurer profile from various sources like newspapers, online research, studying the key people in the company, etc. But a sure shot method to verify the trustworthiness is through the insurer’s claim settlement ratio. The higher the claim settlement ratio, the better chances of claim approval.

Optional Features

Having optional features in a plan will help in different specific scenarios. Some popular features in the best term plan are extended grace period and look-up period, low surrender value, easy and rapid claim procedures, and easy revival and renewal of the policy.

Conclusion

These criteria of plan comparison will help you choose the best term plan. Choosing the best plan is important as it will have most of the term plan benefits mentioned here. The premium amount and the assured sum are the major factors to consider in a term plan. So always choose plans that have the best of these factors.