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5 Less Known Tips - Choose Right Term Insurance

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Tips to choose a Term Plan
March 16, 2023

There are a lot of things in life we can afford to be wrong about, whether a door is a push or a pull, whether you need to carry a jacket outside at 7 AM in December, and whether it is a good idea to consume an entire season of a TV show in a single sitting, for instance. Purchasing a term insurance plan, however, does not feature on this list. As a cover that offers financial protection to loved ones in the unfortunate event of a policyholder's demise, the significance of a term plan is such that the decision to buy one demands careful planning and deliberation.

Due to the overwhelming number of options and variants available in the market, it's easy to get confused and ultimately settle for the plan with the lowest premiums. To make sure that doesn't happen and you pick the right policy for you and your family, we have come up with a comprehensive list of factors you should keep in mind when looking for a term plan. Let's discuss them below.

  1. Making a Need-Based Choice:

    • How much money will you and your family need in the future?
    • How much premium can you afford to pay for the policy?
    • What kind of features and benefits do you want from the policy?
    • What are your assets and liabilities? Your family's future goals?

    2. Each individual has unique needs when it comes to insurance. A single man in his early 20s will not have the same requirements as a married man in his late 30s. That is why, when buying term insurance, it is important to analyse what your specific needs are. Ask yourself questions such as:

    The answers to these questions will help you determine how much cover you should opt for. As a general rule of thumb, the policy’s sum assured should be at least 10-15 times your current annual income, but this can vary depending on your lifestyle, family, and other aspects.

  2. Keeping Inflation in Mind:

    3. The cover you opt for today may not be enough for your family in the future, unless you take inflation into consideration. Since the cost of goods and services will rise, the value of the rupee will drop, thus bringing the value of your sum assured of, say, Rs. 50 lakhs in 2018 to approximately Rs. 30 lakhs in 2028. To combat this problem, many insurance companies offer plans with the flexibility to increase your cover annually.

  3. Paying Heed to Claim Settlement Ratios:

    4. The claim settlement ratio is a quantitative indicator of the number of claims that have been settled by an insurer. It is calculated based on the total claims paid against the total claims received. This ratio is an insightful way to gauge how customer-friendly an insurance company is when dealing with claims. You can use these figures as a key parameter in your purchase decision. The higher the ratio, the better the chances of your claim being settled.

  4. Comparing and Buying Plans Online:

    5. There are several advantages of not only comparing but also buying your plan online. Firstly, there is no intermediary involved in the process, which means you will be dealing directly with the insurance company and saving money on commissions. Also, you get to make an informed decision after browsing and thoroughly researching different kinds of policies from different insurers. This allows you to weigh the pros and cons of each policy and finally pick one that best serves your needs. You can even go through customer reviews and learn about people's first-hand experience with a plan.

    In other words, buying term insurance online is quick, convenient, cost-effective, and enables you to make the right decision.

  5. Purchasing Early in Life:

    6. Most people in their 20s believe that they are too young to be thinking about buying insurance. However, it's worth noting that when you’re in the market for a term insurance plan, age plays a critical role in determining how much you pay for it. The younger you are, the lower your premiums will be. The logic behind this is quite simple when an insurer considers your application, they calculate the amount of risk involved. This depends on numerous factors, mainly your age and overall health. And since individuals who are still young tend to be relatively healthy, they pose less of a risk to the company, thus making them ideal candidates for the policy. So, start early and keep it cost-effective.

 

View Term Plans

 

Now that you're in a better position to choose a suitable term insurance policy, there is no reason not to safeguard your family's future. HDFC Life's Click 2 Protect Life is a term insurance policy that offers comprehensive security against death, disability, and disease and financially protects your loved ones, even in your absence. The plan provides you with the flexibility to select among 9 options, so you get the cover that fulfils your needs at a price you can afford. To buy the perfect term plan, click here.

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ARN: ED/12/19/17049

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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