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How to Ensure Your Term Insurance Plan Is Sufficient and Affordable?

5 Things to Know Before Buying Term Life Insurance Plan - ET MoneyWith financial awareness being spread across society, especially through social media influencers, people often get FOMO. So they rush to buy the best financial instruments in the market. Term insurance is one such instrument that offers financial security in the future for your loved ones. 

But the moment we decide to buy a term insurance policy, we often find ourselves asking – “how much term insurance do I need?” or “Will one crore term insurance be enough?”

In this blog, we will try to find answers to all these questions. So, keep reading.

How Do You Choose a Good Term Life Insurance Policy?

  • Identify the Required Coverage

Ensure your term insurance plan is adequate and affordable. It can be determined by your family’s lifestyle and financial obligations. So you can consider the following factors while evaluating your coverage requirements: 

  • Your current earnings
  • Your unpaid debts, like a mortgage or auto loan
  • Lifestyle costs for your family, such as child education costs,
  • Future financial objectives for your family, such as retirement savings or more 

After determining your coverage requirements, you can select a term insurance plan that offers enough coverage for your family’s financial stability. 

  • Determine Premium 

Once you have determined the coverage, use a term insurance premium calculator to find out the premium amount. See if the premium is affordable for you; not just now, but think about your future affordability. Generally, the premium amount is determined based on the policyholder’s age, income, lifestyle preferences, and desired level of coverage. 

If you think the premium is a bit too high for one policy, compare the different plans to find a better deal. Always look for affordable term life insurance plans that fulfil all of your needs and provide the level of coverage you desire. 

  • Choose the Right Term Plan

Choosing the proper term insurance duration is also necessary to ensure your family has a financial umbrella over their heads until they need it. So to find an appropriate term, you can consider the following factors, such as:

  • Age: The younger you are, the longer it will be.
  • Financial Goals: Long-term financial goals need extended periods or vice versa.
  • Debts and Liabilities: More debt needs to be paid off in the long term.
  • Dependents’ age: If you have younger children, choose a longer plan, or vice versa.
  • Retirement age: plan to retire early, then go with a longer plan or vice versa. 

For example, Tata AIA term plan is a reputed policy that you can take a look at.

  • Read Policy Documents Carefully

When selecting a term insurance policy, it’s critical to carefully study the policy documents, such as the coverage, the cost, and the terms and conditions of the plan. It helps you ensure that everything is as needed and acceptable. So when it comes time to file a claim, you won’t get any unpleasant surprises. 

  • Evaluate Your Coverage Requirements Regularly 

Your coverage requirements may change as your financial situation and way of life change. Thus, it is important to regularly assess your coverage requirements and modify your term insurance plan as necessary to ensure it remains reasonable and adequate. For instance, you might need to increase your coverage if you have another child. 

  • Consider Riders 

Riders are additional and optional benefits that you purchase for a fee. To get more or more comprehensive coverage for you and your family, you can specifically choose the riders according to your needs. Some famous riders you can choose from are the critical illness rider, the accidental death rider, the waiver of premium rider, and the disability rider.

Conclusion

You can choose the best term policy by considering all these factors, which help provide financial security and guarantee the future of your loved ones. When it comes to making long-term financial decisions like buying a term insurance policy, you should take things slow and with caution. Do your due diligence before making your purchase.