Term insurance is an excellent financial security tool. It is straightforward and affordable. When you first apply for a term insurance plan, you get a quote encompassing different components related to the coverage types and options. If you want to evaluate the term plan, then the following are the factors that you should consider –
- Your Age
As you grow older, it increases the risk of health complications; this increases the risk of the parts of the insurance companies. Therefore, it is recommended to invest in a term plan as early as possible. A person who is 35 years of age pays double the annual premium as opposed to an individual who is 25.
- Base Premium
It is the basic amount of premium that you have to pay, excluding riders and taxes. The amount is typically lower when you take an online term plan than offline options. The base premium determines different factors that include age, smoking habits, genders, etc. The higher the health risk, the more will be the base premium.
- Tax Factors
Life insurance policies are also subjected to service tax. There is a standard addition through the different types of policies and insurers. When you get an insurance quote, consider whether or not the service tax is included.
- Riders
These are designed as additional cover added to the base plan. You can select from a wide range of riders that include critical illness cover, accident cover, disability cover, and much more. Ensure to read through the features of these riders to get additional benefits. Additionally, pay special attention to the terms and conditions of these riders when you receive a quote.
- Medical Test
Not every insurance company asks you for a medical test. However, it is recommended to take the test. This is because a healthy test results increase your chances of getting higher coverage at lower premiums. And if the health problems are not revealed beforehand, then the company can reject your claim.
- Duration of the Policy
The cost of your insurance policy depends on its duration. And the tenure of your term insurance plan depends on the factors that include age, current income, retirement age, expected hike in income, financial responsibilities, etc.
- Compare Quotes
Once you have read through the fine print of the policies offered by different insurance companies, it is time to compare the quotes. It is important that you take your time to go through all the policies and compare them in order to choose the one that caters to your needs. Additionally, when comparing, the claim settlement ratio should be a minimum of 90%.
Final Thoughts
While a valuable saving component, taking a term plan can be risky if you are not careful. In order to ensure that you get the most of your investment, it is important to spend some time in research. Choose some of the best insurer providers and then get quotes from each one of them. Subsequently, use the above factors to compare the different quotes against each other. This will allow you to choose a term plan that aligns with your present and future financial requirements.
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