There is no limit to the emotional support having life insurance gives to a family who lost one of its members. It is why several people prefer life insurance to protect their families. But having a life insurance policy may be tough on the budget due to the high premium. There is only one solution to remedy this problem: Term Insurance. Several term insurance benefits often outweigh regular life insurance in terms of the financial freedom the policyholder gets. The major one is a reduced premium. If you are also looking for great term insurance to protect the family, you must know the basics, especially if you are a first-time buyer. So read on as here you will find the perfect guide to purchasing the perfect term insurance.
Comparison of Term Insurance Plans
Knowing all the available plans is necessary to purchase the best term insurance plan. And this is only achievable through the comparison of all plans based on their expense and returns. A comparison will show the extra benefits a particular plan provides its customers. It will also show the shortcomings of a plan, which will prevent an individual from purchasing a plan which will not be useful in times of need. But before moving ahead with comparison, you must collect all the necessary details of the plan from credible sources. After collecting the details, one can compare the plans based on the following criteria.
Premium amount must always be the priority for comparison in any insurance because it is the direct expense. One must also keep in mind that the premiums do not have a money-back policy in term insurance plans. So, at the term-end, when the policyholder is still alive, the insurer won’t provide a maturity benefit. Even though the premium rates of term insurance are much lower than that of regular life insurance, they can have adverse effects on the finances. So, it is always good to make sure the premium is low enough not to burden the existing lifestyle.
Death Benefit Amount
While the premium is the direct expense, a death benefit is a direct return from the term insurance plan. So always ensure that this death benefit amount is high enough to make the most of having a policy. A higher amount will also ensure higher term insurance benefits to the dependents or nominees. With it, they can live the rest of their lives peacefully or have a source of income until they start earning themselves. As per the Income Tax Act rules, any life insurance death benefit will not attract income tax. So, the nominee will get the entire sum of the death benefit without any tax deductions.
Relaxations In Term Insurance Plans
Insurance companies and the government give several relaxations for having a term insurance plan. Most of these helps indirectly save money spent on insurance. A policyholder’s term insurance benefits increase if they are a minor or a senior citizen. They can get extra discounts on the premium rates. Tax savings is another relaxation in insurance policies. A policyholder can deduct up to INR 1,50,000 per year through the tax deductions available for premium payments. So, ensuring that the term insurance plan has the maximum relaxations will help reduce the premium burden.
Policy terms are also an integral part of the insurance policy as they define the policyholder and the insurer’s liabilities. Ensuring that there are no hidden clauses or exclusions in the policy will prevent the chances of loss or claim rejection.
The insurer profile also requires verification before purchasing their product. Because of a more trustworthy insurer, the chances they will respect the insurance and approve a claim is also more. The claim settlement ratio can directly show an insurer’s dedication towards its customers.
This extensive guide will be useful to anyone looking to buy a term insurance plan. Everyone can benefit from knowing new methods of comparison and purchase to know the best insurance plan.