Life insurance buying can resemble a nightmare, with tons of words that you could only see in legal books. However, deep down, a life insurance program is nothing but a simple wager: you pay a little money now to make sure your family is safe and well financially in the future.
One can compare it with a circus performer’s safety net. You wish you had never had to use it, but you are greatly relieved by the fact that it is there. In case you are planning to get Indian term life insurance, this article will help you buy term life insurance most conveniently.
What’s Term Life Insurance?
Let’s understand the product before we proceed with the steps. Term life insurance plan is the most uncomplicated form of insurance. Every year, you are charged a small fee (called a premium). On the other hand, if any unfortunate event happens to you, the insurance company will pay a huge sum of money to your family.
The amount is not returned if you stay healthy (except for certain types), but it is the least expensive way to ensure that even in your absence, your family can continue living comfortably and eating good food.
Step 1: Figure Out “How Much”
First, work out how much money your family would need. It is possible that you may pick a random number like 1 Crore just because it is a big figure. However, we need to examine three aspects:
- Your Bills: How much does your family spend every month on food, light, and fun?
- Your Loans: Do you have a house or a car loan? Then, your insurance should cover these payoffs.
- Future Dreams: Do you want your kids to attend a great college? Do you want your partner to be able to live a comfortable life?
As a basic guideline: Choose a sum between 10 and 15 times your annual income. So, if you earn 10 Lakhs a year, your insurance coverage should be around 1.5 Crores.
Step 2: Pick the Right Time (The Sooner, The Better)
Insurance is one of those few things in life, which ironically, the more you delay, the costlier they become. When you are young and healthy, the insurance company sees it as “This individual is low risk!” Hence, they offer you a lower price.
It’s a fact that the older you get, the more expensive it becomes. Buying term life insurance at 25 could cost as little as a few pizzas a month. However, if you wait until you are 45, it may be as much as a fancy dinner that you have every month.
Step 3: Pick Your Plan Features
Plans can differ quite a bit. You even have the option of including “extra bits,” which are called riders. Here are the most popular ones:
- Critical Illness: In case you fall seriously ill (like cancer), the insurance company will instantly pay you a sum of money to help you with the medical expenses.
- Accidental Death: In case you die due to an accident, your family will be given additional financial support by the insurance company.
- Waiver of Premium: In case you get so physically hurt that you cannot work anymore, you won’t be required to pay the premium of the insurance anymore; however, your insurance coverage will not be interrupted.
Keep it simple. Add only those things that you really feel you need.
Step 4: Compare Different Companies
In India, we have lots of good companies. Don’t just choose the one your neighbor is taking. Go online and compare them. Find something called the Claim Settlement Ratio (CSR).
This tells you in percentage terms how many times the company actually issued the money when the family requested it. You should opt for a company with a CSR of more than 98%. Such companies are trustworthy and are very helpful.
Step 5: Fill Out the Form Honestly
This is the key point. The company will ask you a lot of questions during your life insurance plan application process.
- Do you smoke?
- Do you drink?
- Is there a history of heart problems in your family?
Don’t ever lie. If you lie to save a couple of dollars, the insurance company might turn down your family’s claim later. You should rather pay 100 Rupees more now than let your family have 0 Rupees later due to a mistake on the form.
Step 6: The Medical Check-Up
In most cases, the company will require you to have a medical examination. Don’t stress about it! In most cases, they will cover the costs. It’s quite possible that a nurse will visit your home, measure your height and weight, and even take a bit of blood.
This way, the company can make sure you are in good health. Actually, if you are really fit, they could even offer you a better rate!
Step 7: Pay and Stay Safe
After examining your health report, the company will get back to you with the final price. You make the first payment, and that’s when your insurance begins!
However, your responsibility doesn’t end here. You need to inform your family about the insurance plan. Also, let your spouse or parents know the location of the documents. Because if they are unaware of the existence of the plan, they wouldn’t be able to claim the money even when necessary.
Common Questions (Simplified)
What if I stop paying?
Non-payment means the loss of your “security cushion.” Your family won’t be under your protection anymore. Make a habit of paying on time.
How long should the plan last?
Best to have the plan with you until the retirement age, say 60 or 65. By then, your children will be out of the house, and you will be relying on your savings.
Can I buy it online?
Indeed! Getting them online is often less expensive because there is no middleman taking a cut. It is quite safe and quick.
Summary for Your Journey
Purchasing a life insurance policy is a demonstration of affection. It expresses the sentiment, “I love you so much that I want you to be okay even in my absence.”
- Evaluate your requirements.
- Check different firms.
- Ensure honesty in providing data.
- Don’t lose the documents.
Now you are ready to buy term life insurance and give your family the gift of a worry-free future. It’s simple, smart, and the best thing you can do today!