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How to Evaluate Your Term Insurance Quote?

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How to Evaluate Your Term Insurance Quote?
September 11, 2023

Table of Content

 

A term insurance plan is a great way to hedge future risks and keep your loved ones protected in your absence. Term plans are simple to understand and offer affordable life covers at relatively low premium rates. This makes them attractive and uncomplicated insurance policies for the common man.

While there are no qualms about the proven benefits of a plan, finding the right balance between affordability and suitability remains key for most prospective insurance buyers. This is where insurance quotes come in. A term insurance quote is the cost of the policy for the type and extent of coverage selected.

Different insurance providers can issue different term insurance quotes depending on your age, type of coverage, lifestyle habits, and other related factors. Evaluating quotes helps you pick a plan that best suits your coverage needs while meeting your financial goals.

Ways of Evaluating Your Term Insurance Quote

Let’s take a look at the different variables you should consider when evaluating term insurance quotes.

Compare Sum Assured Figures
Your term insurance plan is meant to offer your loved ones financial stability in your absence. The payout ideally covers the expenses of your household, your children’s education or marriage, unforeseen medical bills, etc. To ensure that their future remains adequately secured, assess your existing expenses and estimate future costs to find the right plan with the best coverage amount.

Assess Premium Expenses
Your base premium cost is the amount payable for a life cover. This quote varies depending on factors like your age, lifestyle habits, gender, occupation, etc. Apart from assessing base premium costs, evaluate the entire premium payment structure including payment frequency and inflation adjustments. This will help you determine if the plan fits into your budget and avoid missing future payments.

Check the Policy Tenure
Policy tenure is the length of coverage offered by a term insurance plan. Term plan tenures can vary from 10 to 30 years, with some even offering up to 40 years of coverage. Term insurance tenures range from 10 to 30 years, with some companies offering coverage up to 40 years. Further, policy tenure is not a fixed period and can vary based on the individual's needs. However, when selecting a term for the policy, you need to assess factors like your current cash flow, financial liabilities, expected retirement age, existing dependents, and future liabilities. Doing so helps align your term insurance plan with all your present and future needs, thereby maximizing its benefits.

Evaluate Policy Renewal Costs
Apart from premiums, you also need to factor in the statutory costs associated with a term insurance plan. For instance, let’s say, five years down the line, you encounter a financial emergency and fail to pay the premiums for the plan. In this case, your term policy may lapse, pausing your insurance coverage benefits. Term Plans include revival clauses that stipulate payment of due premiums and interest amount. When evaluating quotes, this nitty-gritty of add-on costs needs to be considered.

Compare Cost of Available Riders
You can opt for add-on riders1 to enhance the coverage umbrella of your term insurance plan. In other words, you can customize your term insurance plan with risk specific covers like a critical illness cover, accidental death benefit cover, or disability protection cover. However, every add-on term insurance rider1 comes with a certain cost. Thus, when you’re evaluating your term insurance quote, assess the types of riders available and their corresponding costs.

Compare Policy Quotes
Comparison is key when selecting a term insurance plan. Comparing policy covers, premium costs, add-on riders1, and other statutory costs will help you find a term insurance plan that best suits your needs without straining your pockets.  

Use Online Premium Calculators
Term insurance premium calculator can help you compare quotes automatically rather than comparing manually, most insurers provide this digital tool on their websites. Term insurance premium calculators use a set of parameters - like age, financial liabilities, number of dependents, and lifestyle - to determine your policy cover and tenure.

Conclusion

Using these steps to evaluate your term insurance quote helps you make an informed decision. Moreover, doing so also lends to a better understanding of the policy’s terms and conditions and coverage gaps, helping you tailor the plan to best suit your needs.

Related Article:

ARN- ED/08/23/4071

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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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