With coronavirus (COVID-19) affecting the normal way of life, you tend to think of worst-case situations. Certainly, you are worried about the future of your loved ones in case of your unfortunate absence.
The pandemic teaches you to plan the financial future of your family members. Apart from focusing on safety and hygiene and practicing social distancing, you need to ensure the financial protection of your dear ones from monetary uncertainties.
An excellent way to achieve this objective is by investing in a term policy. This type of insurance plan is critical at every stage of life. It is an economical way to make sure that your family is financially stable. In the case of an unfortunate event during the policy term, your beneficiaries get the monetary coverage (sum assured). Thus, they need not deal with financial distress while undergoing an emotionally challenging circumstance.
Now that you understand term insurance meaning, do not postpone your buying decision any further. If you already have a term plan, check these five things to maximize the benefits:
Evaluate your financial requirements
Your financial needs are dynamic and change during various stages of life. While the coverage may have been adequate when you purchased the policy, now, your requirements may be different. Analyze your current lifestyle and expenditure to determine the ideal sum assured. If necessary, consider increasing the coverage to ensure your family members can maintain their present style of living, pay for regular expenses, and meet educational and wedding-related costs of your children. Do not forget to consider the increase due to future inflation.Calculate the period
A term plan primarily pays a lump sum to your beneficiaries due to an unforeseen event. Income replacement is important, especially if you are the sole earning member of the family. You need to keep your present age and retirement age in mind to determine the tenure and coverage amount. Generally, you must procure 10 to 15 times your annual income as the sum assured during the policy duration.Enhance coverage through riders
An online term plan offers several riders to enhance the coverage of your base plan. These include disability, critical illness, waiver of premium, and accidental benefits. You must include these riders to get comprehensive coverage and additional financial stability. Consider your personal needs to add necessary riders, which are available for an extra nominal premium.Check the claim settlement ratio (CSR)
This ratio depicts the number of claims settled against the total number of claims filed during a year. You must select an insurer that has a higher ratio to ensure your family’s claim gets approved in case the need arises in the future. Often, this information is available on the insurer’s website in the form of a percentage.Analyze and opt for the accurate plan
Several insurance companies offer different types of term plans, and choosing the right policy may be confusing. The four common kinds of term policies include the basic term plan, monthly income plan, increasing monthly income plan, and term plans with a return of premium. You must understand these types of policies and review the terms and conditions, premiums, inclusions, and exclusions to make the right decision. Additionally, you need to review your situation and requirements to choose the ideal plan.Although a term plan cannot relieve the emotional distress of your absence, it is a cost-effective and easy way to ensure the financial well-being of your family. With a higher coverage, you can secure the long-term financial security of your loved ones to cover current and future expenses.
