In today’s digital age, purchasing insurance has become as easy as ordering your favorite pizza online. But unlike a quick snack, buying an online term plan is a major financial decision—one that secures your family’s future. So, how do you know you’re making the right choice? Don’t worry; we’ve got you covered. Here are 15 crucial things to consider before clicking that “Buy Now” button.
15 Things to consider before buying an online term plan
1. Understand What a Term Plan Is
Let’s start with the basics. A term plan is a pure life insurance product that provides financial protection to your family in case of your untimely demise. Unlike traditional life insurance policies, there’s no maturity benefit. It’s like renting a house—you pay for protection but don’t get the premium back unless you choose additional features.
2. Assess Your Coverage Needs
How much coverage is enough? A good rule of thumb is to have a sum assured that’s at least 10-15 times your annual income. Factor in liabilities like loans, children’s education, and future expenses to determine an amount that secures your loved ones comfortably.
3. Consider Your Budget
While term plans are the most affordable life insurance products, it’s important to pick a premium you can consistently pay without stressing your finances. Online platforms offer tools to compare premiums—use them wisely.
4. Check the Insurer’s Claim Settlement Ratio (CSR)
A higher claim settlement ratio indicates a higher likelihood that your insurer will honor your family’s claim. Ideally, pick an insurer with a CSR above 95%. It’s like checking a restaurant’s reviews before you eat there—better safe than sorry!
5. Evaluate Policy Duration
The term of your policy matters. Ideally, your plan should cover you until you’re at least 60-65 years old, or until your financial liabilities reduce substantially. Buying short-term coverage might leave your family vulnerable.
6. Look for Riders and Add-ons
Riders are like the toppings on a pizza—they’re optional but add extra value. Popular riders include:
- Accidental Death Benefit: Extra payout in case of accidental death.
- Critical Illness Rider: Covers major illnesses like cancer or heart disease.
- Waiver of Premium: Premiums are waived if you’re unable to pay due to disability.
7. Understand Premium Payment Options
Term plans offer multiple payment options—regular, limited, or single premiums.
- Regular: Pay annually or monthly until the policy term ends.
- Limited: Pay for a few years, but enjoy coverage for the full term.
- Single: Pay a lump sum upfront. Choose an option that aligns with your financial plans.
8. Analyze Tax Benefits
One of the biggest perks of buying a term plan is the tax benefit. Under Section 80C of the Income Tax Act, premiums are eligible for a deduction of up to ₹1.5 lakh annually. Plus, the death benefit is tax-free under Section 10(10D). It’s a win-win!
9. Don’t Overlook Inflation
The ₹1 crore sum assured that sounds huge today might not be enough 20 years later. Inflation erodes purchasing power, so opt for increasing term insurance plans. These policies automatically raise your sum assured over time to keep up with inflation.
10. Opt for a Trusted Insurance Provider
The credibility of the insurer is as important as the policy itself. Look for established companies with a strong track record, excellent customer service, and user-friendly digital platforms.
11. Read the Fine Print
Before signing on the dotted line (or clicking “I Agree”), read the policy document carefully. Pay close attention to exclusions, terms, and conditions. For instance, deaths caused by suicide within the first year are usually not covered.
12. Check the Flexibility of the Policy
Life changes—your term plan should be flexible enough to adapt. Look for policies that allow you to increase your coverage as your financial responsibilities grow. For example, you might want higher coverage after marriage or the birth of a child.
13. Buy Early to Save on Premiums
The earlier you buy a term plan, the lower your premium will be. Age and health play a big role in determining the cost. It’s like booking flight tickets—the sooner you act, the cheaper it gets!
14. Ensure Proper Disclosure of Information
Be honest when sharing your medical history, lifestyle habits (like smoking or drinking), and personal details. Any mismatch or omission can lead to a rejected claim, leaving your family in distress.
15. Leverage Online Comparison Tools
Online platforms make comparing term plans quick and easy. Use comparison tools to evaluate multiple policies based on premiums, features, CSR, and add-ons. You can also read customer reviews to gauge service quality.
Buying an online term plan isn’t rocket science, but it’s certainly not something to rush into. By taking the time to understand your needs, comparing options, and choosing a credible insurer, you’ll ensure your family’s financial future remains secure. Remember, a term plan is more than just insurance; it’s peace of mind wrapped in a policy. So, do your homework, and invest in a plan that truly fits your life.
