How To Choose a Term Insurance Plan?


Term Insurance is one of the most important products offered by insurance companies.

Term insurance is a  life insurance product that provides a risk cover for a certain period of time, or a specified “term” of years.

If the insured dies during the time period specified in the policy and the policy is  in force (active) – then a death benefit will be paid out to the nominee.

Term Insurance is one of the cheapest products offered by insurance companies.

The earlier you buy a term insurance, the lower the premium you have to pay.

The higher the amount of cover desired, the higher the premium you need to pay.

How to select a Term Insurance ?

Now that you’ve decided to go for a term plan, the next hurdle is choosing which company and which product to go for?

Factors to keep in mind while choosing a term plan

Claim settlement Ratio , Premium Amount, Term of the policy.

How much life cover do I need?

As a thumb rule, you should at least get a cover of 10 * your annual salary/income.

There is a maximum capping of 20* Annual salary/income. Therefore, e.g. If your annual CTC were INR 10,00,000/- the minimum cover you should take is INR 10,000,000/-

Some term plans have additional features built in viz. accidental death benefit,income option etc.

Since it becomes expensive to opt for more cover as you age, it makes sense to opt for a good cover when you are young. once you have dependents, it becomes even more important to enhance the life cover.

Tip: Compare the claim settlement ratio of companies before opting for insurance.


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