The coronavirus (COVID-19) pandemic has taught us that life is quite uncertain. During these times, it is difficult to stick to your goals. However, it does not mean that you cannot prepare for them. It is the right time to start planning your future, especially your finances. It is high time for earning family members to opt for a life insurance policy that can protect their loved ones.
Currently, a term life insurance policy is a popular choice among Indians because of its affordable pricing and substantial coverage (sum assured). Most of the respected insurance companies are now offering the facility to buy the policy online. If you are still not sure about what is term insurance policy and how to purchase one, read on.
About term insurance
A term life insurance policy is a contract between an insurance company and a policyholder. The term plan stays active for a fixed period, as long as you pay the premium on time. If any unfortunate event leads to the absence of the policyholder during the policy tenure, the insurance company pays the sum assured to the nominees. The nominees can use the money for any purpose as per their requirements.
How to buy the term plan online
The process of purchasing term insurance plans online may vary a little among different insurance providers. The common steps include:
- Visit the online portal of your preferred insurer
- Locate and enter the term insurance policy section
- Give any information or document that the insurer requires
- Provide the required sum assured
- Choose the policy tenure
- Opt for your preferred premium payment option
- Select the payment method of your choice and pay online
Once you complete these steps, you will receive the acknowledgment. Within a few days, the insurance provider will contact you to inform if the application was accepted. Upon approval, they will send you the policy document.
How to choose the term life insurance policy
Before you buy a term plan, you must consider multiple factors. Here are some points that will help you select the right policy:
- Your nominees
The purpose of a term plan is to provide financial security to your loved ones. Hence, when you buy the policy, it is necessary to ensure that the sum assured will be sufficient to meet their monetary needs. In your absence, the family members will need enough money to fund the household expenses and their personal financial goals. Calculate how much money they may require and choose the policy cover accordingly.
- Your financial liabilities and debts
In your absence, the family will have to pay for your outstanding financial obligations. If you had ever taken a home loan or a car loan, your dear ones would have to repay these debts. They will also need money for your child’s education and wedding in the future. The term policy benefit must be large enough to cover all these expenses.
- Insurer’s Claim Settlement Ratio (CSR)
The CSR is an indicator that can give an idea about the reliability and capability of your term insurance plan provider. It is the ratio of the number of policy claims your insurer settles to the number of claims they receive every year. A higher CSR means you can depend on the insurer to pay the sum assured when your nominees make a legitimate claim.
- Duration of the policy
When buying the term plan, ensure that the policy is active until your years of service. This will allow you to pay the premium on time and keep your loved ones safe for many years.
You can use an online term insurance premium calculator to quickly find the premium you have to pay for your desired sum assured. Doing this will help you decide which policy to purchase.