Things to look for while comparing term insurance policies

by Radha Lakshmi Blogger

When you are looking to ensure the financial safety of your family after you are gone, what are the options at your disposal? Most people would either say savings or bank deposits. While these options are helpful, they are insufficient, especially during emergencies or in accomplishing goals in the future. To leave behind a financial legacy that can sufficiently assist your loved ones, one must invest in term insurance.

There are close to 60 insurance companies in India, with more than 20 of them being life insurance companies. This means lots of options at your disposal. However, when looking to buy a suitable term plan, you will need to look at different factors before zeroing down on a suitable choice. Comparing plans can be helpful. Keep on reading to know how you can compare policies.

What is a term plan?

When looking for a life insurance policy, term plans are one of the top options. But this also leads people to ask the question: what is term insurance? A term plan is a type of life insurance policy. As the name suggests, this type of policy comes with a term duration. Most term plans come with a duration of 5-, 10-, 15- and 20-years duration with some going up to 30 years as well. If the policyholder were to suddenly pass away during the policy term, the insurer will compensate the dependents of the policyholder with a sum assured.

Why should you compare term plans?

As mentioned earlier, there are various options at your disposal when it comes to choosing the right term plan. However, doing enough research prior to purchasing the plan will help you select a plan that fulfils all your requirements without falling short. Comparing different term insurance plans helps you understand what one insurer is offering compared to the other. This makes it easier to select the plan that matches your needs.

Factors to look for when comparing plans

When you are comparing term plans online, keep an eye on the following factors:

1. Cost of the policy

One of the reasons why people avoid buying a term plan is due to the misconception of it being costly. However, the price of your policy is dependent on factors such as your age, duration, and sum assured of the policy. Buying the policy early on helps lower the premium you pay towards the policy. However, if you were to buy the policy at a later age, the premium would be higher. Similarly, the sum assured amount also impacts the cost of the policy. When comparing policies, see how much the policy would cost you on the basis of your requirement. You can use a term insurance calculator as well to get an idea about the cost based on your inputs.

2. Claim settlement ratio of the insurer

As a policyholder, if you were to pass away during the term of the policy, the insurer will compensate your dependents. This compensation is disbursed when the nominee or a family files a claim. Once the claim has been verified, the insurer will disburse the compensation amount. This is known as claim settlement. The claim settlement ratio of an insurer indicates the number of claims that were settled as compared to the number of claims that were received by the company in a particular period. A higher claim settlement ratio indicates a higher chance of your claim getting approved. Look for the insurer with a higher claim settlement ratio.

3. Services offered by the insurer

When you are looking for an insurer to buy your term plan, you should look for one that has a wider network of agents and branches. This would enable you to connect with them when you are looking to buy or renew the policy. Similarly, if you have any queries related to your policy, you will want the insurer to be able to clear them off at the earliest. Insurers that offer better customer service in the shortest time possible are always valued by customers. Look for an insurer that has a good track record of customer service based on actual reviews.

4. Options offered in the policy

Riders help in the enhancement of the coverage of your policy. Riders such as critical illness cover, accidental death cover, and disability cover are offered in term plans. However, one insurer might offer fewer riders compared to another insurer. Go for an insurer that offers the maximum number of riders. However, do keep in mind that the riders increase the cost of the policy. Include only those riders that suit your requirements.

Conclusion

These are some of the factors that you should consider when you are comparing term insurance policies online. To know about other things related to term plans, you can get in touch with your insurance advisor.