We discussed the importance of term insurance in the previous post. But time to discuss on how to select term insurance, sum assured and add-on with the term insurance. Selecting the Right Term Insurance for Your Family is important in personal finance planning.
1). Decide on sum assured:
Term insurance for your family and your kid’s education. So select sum assured based on your preferences. It is recommended that sum assured should be 10 times of your annual salary. If your annual salary is 10 Lakhs, select sum assured for 1 Crore.
2). Term coverage:
Most of the term policy covers till 60 years of your age. But there is option to select term coverage. We can select term coverage till 99 years. But premium would increase based on term coverage. Select term coverage till 60 or 70.
3). Claims Settled:
Check claim settled percentage of term insurance company. It should be more than 96%. Select maximum claim settled term insurance as it ensures the insurance company. Most of the insurance companies claims settled more than 90%. So do not worry much on this as all the companies are better to take term insurance.
4). Joint Cover:
Few term insurance policies provides option to include spouse(Husband/Wife) in your term insurance. Select the term insurance which cover your spouse if you feel it is required. Under the Joint Life Coverage Option, both the Policyholder (the First life) and his/her spouse (the Second Life) are covered. This option needs to be chosen at the inception of the Policy.
5). Critical illness:
It provides supports to you in future if we suffer by critical illness such as stroke,Kidney failure. In case of critical illness, family needs financial support for medical expenses. Critical illness add-on with term insurance provides support for critical illness.
6). Heart and Cancer care :
We can opt for heart and cancer care addon with term insurance. It provides support to the family financially in case of heart illness or cancer. It would increase the premium for cancer cover. So select the cover only if you feel it is required.
7). Increase your cover based on life stage:
As you progress through the various stages of life your responsibilities increase & your life cover requirements will also increases. Under Life stage protection option you get the option to buy additional Life cover according to your current age, No medical examination is required. You can opt for term insurance with life stage option and it would adjust the premium accordingly.
On marriage: 50% of Original Life Cover (Sum Assured) can be taken subject to a limit of 50 Lacs.
On first child: 25% of Original Life Cover (Sum Assured) can be taken subject to a limit of 25 Lacs.
On second child: 25% of Original Life Cover (Sum Assured) can be taken subject to a limit of 25 Lacs.
8). Payment option for Your Family:
Lump Sum payment on death : Under this option, the Death Sum Assured shall be payable as ‘Lump Sum’ on death.
Lump sum + Monthly Income for 10 years : Under this option, 50% of the Death Sum Assured shall be payable as ‘Lump Sum’ on death and the balance will be paid as level monthly instalment over 120 months (10 years).
9). Let your family know the term insurance:
It is really important step in term insurance. Do not keep term insurance information secretly. Share your term insurance details to your family and explain the basic of term insurance. It is important to teach the family on term insurance.
10). Premium Monthly or Yearly:
We can select the payment option for term insurance. We can pay the premium monthly or yearly. It is all your own financial plan. Term insurance premium is tax-free in Income tax section 80C. So plan the term insurance according to tax planning.
Do not take for huge money, such as 2 Crore or 3 Crore. It would increase your premium. Better invest in mutual fund with term insurance cover of 10 times of your annual salary.
How much time would take to start term insurance:
It would take hardly 15 min to start the term insurance. Goto Term insurance website or call to term insurance professional.
1). Select your term insurance plan.
2). Goto term insurance website or call to insurance professional
3). Give all the necessary information.
4). Start term insurance by paying the premium.
It is very easy to start
Never ever stop term insurance
Starting Term insurance would take just 15 min
You can’t surrender or take loan from term insurance
Pay premium promptly and continue the term insurance for your family
Famous Term insurance provider:
ICICI
HDFC
Max life
Aegon life
PNB metlife
Bharti AXA
I hope now you are clear about term insurance, how to select term insurance and how to start it. Spend 15 min and start term insurance now. Take care of your family by Term insurance 🙂