Top 5 Term Insurance Plans In India

Best Term Insurance Plans in India 2024

Choosing the Right Term Insurance Plan is Important:

You may find a wide variety of term insurance plans available in the market with various benefits. However, it would be good if you do not follow a one-size-fits-all approach while considering the term insurance benefits.

You should take adequate life cover based on your financial liabilities and select appropriate add-ons based on the kind of coverage you are seeking. Keep in mind that you know and understand various facets related to buying term insurance plans online or offline before you buy one. As a rule of thumb, buy a term insurance plan with a cover that is at least eight to ten times your annual income. For example, if you currently earn Rs. 5 lakh in a year, then you should select a life cover of around Rs 40 – 50 lakh or more to get the maximum benefits of a term insurance plan.

Factors to consider before opting for Term Life Insurance:

1. Need-based Investment: The golden rule is that the life insurance you buy should be ten times your annual income so that your family can stay without financial strain if anything happens to you. When choosing life insurance, it is necessary to consider any pre-existing medical conditions as well as mortgages. Your financial holdings should be based on your needs and diversified.
2. Prices: Before choosing the policy or policies, compare the rates and the different charges associated with the policy or policies you are interested in using the web aggregators that are readily available today. Then, ensure the insurance provider you select has pricing that fits your financial strategy and is within your budget.
3. Claims Settlement Ratio (CSR): Claim settlement ratio (CSR) is the ratio of claims settled by an insurance company against total claims received annually. A high ‘CSR’ indicates that the corporation makes it simple to resolve claims. The claim settlement ratio helps in evaluating the customer-friendliness of life insurance companies.
4. Solvency Ratio: Solvency Ratio is a measure used for assessing the capacity of a company to meet its debt obligations, claims obligations, and other financial commitments. The higher the solvency ratios are, the more efficient their companies are in paying up claims. IRDAI states that every insurer must maintain a minimum solvency margin of 150%. Each company’s solvency ratio is published annually by IRDAI.
5. Service Quality, review, and ratings: One of the most important things to look for when deciding on an insurance company. Find out who may become customers based on the behavior of insurance companies towards you and people like you. Ratings and reviews on insurance companies can help in choosing the best one. While some may be false and fabricated by rivals within the market, a chain of complaints from different clients against a similar company gives customer satisfaction an indicator.
6. Reliability of Insurer: The insurance company’s reputation is the key factor that tells whether the insurance company will be able to provide you with life cover. You must check the company profile from the insurance company’s portal before buying a term plan.
7. Option to Add Critical Illness Cover: Critical illness is a very important rider that covers severe diseases. You must look for it while buying a plan.
8. Availability of Additional Riders: Riders like accidental death and disability benefits can be useful for you in such events. These riders will help your family with additional money or help you continue the life cover without additional premium payments.
9. Tax Benefit: Availing insurance policy enables an individual to get tax benefits under section 80C of the Income Tax Act, 1961.

Conclusion:

Term insurance offers more coverage for a lower premium, is easy to understand, and has significant tax advantages. However, before accounting for all these advantages, keep in mind that the primary goal of insurance is protection, not savings. Term insurance, unlike the majority of life insurance products, stays true to this goal.

Disclaimer: This blog is purely educative and is not intended to provide advice on investments/securities quoted herein or elsewhere.