Looking for term insurance is the best decision to ensure the familyâ€™s safety even in their absence. Through these plans, they can provide for the familyâ€™s expenses and ensure their financial safety. But, if you are looking for the best term insurance plan, then there are some things to do well in advance before purchasing a plan. Below is the detailed discussion on that topic, so read on to know more about those things to do before purchasing a plan.
7 Things to Do While Finding the Best Term Insurance Plan
After knowing the benefits of term insurance, anyone would be interested in purchasing the best term insurance plan. But it involves many crucial elements, so finding term insurance should only be through using proven methods. A benefit of doing so is that the chances of getting insurance with the best customer support are possible. The chances of the insurance being useful in times of need also increase.
These criteria will help weed out insurers and plans that take advantage of the customer and create losses through hidden liabilities and clauses, even though it is term insurance. Below are seven things one needs to do while finding the best term insurance plan.
Know Your Budget
Planning the budget before searching for term insurance will help you know a rough idea of the available investment amount from the savings. One cannot divert the entire savings towards finding term insurance, so they must decide how much they are willing to spend for insurance from the budget. After deciding the amount spendable for insurance, the remaining savings are visible.
Define Your Required Death Benefit Amount
Based on the requirements, the next step is to decide how much the death benefit amount should be. A good way to decide the death benefit amount is to consider the number of dependents and how many years they will require the sum from the insurance. If the dependants are children, they will require at least 15 to 15 years to become self-reliable through their source of income. And if the dependents are retired spouses or elderly parents, they will require funds for the rest of their lives.
A rough calculation of annual expenses and multiplying it with the remaining years and inflation rates will give a rough figure. Afterward, an addition of an extra ten percent of the amount will ensure space for unexpected expenses.
Gather Details of The Nominees
Apart from personal documents, the insurance application will also require the details of the nominees. So, arranging these in advance is advisable. Another common mistake that people do is not telling their nominees that they purchased term insurance. The nominees must be aware of the term insurance, their nomination, and the claim procedure to ensure that the investment doesnâ€™t go in vain for the lack of knowledge.
An estimated INR 82,000 crores lie with financial institutions because of lack of a nominee or the knowledge of the accountâ€™s existence, and a fair share of it belongs to the insurance sector. To avoid such mistakes from not claiming a policy within the stipulated time, the IRDAI has a set of rules (Protection of Policyholdersâ€™ Interests) Regulations, 2002. With that help, a nominee will get fast and assured death benefits for all legally accurate claims.
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Compare Plans Before Selecting One
After knowing the budget for insurance premium and death benefit amount, the next step is to compare plans. The comparison should be mainly based on the plans available that provide the required death benefit amount from the available premium budget. After that, the scrutiny should be using the criteria of payment frequency, insurerâ€™s reliability, ease of payment, fast claim approvals, and tax relaxations.
Finalize The Policy Terms
After comparison, thoroughly scrutinizing the policy terms of the final few selected policies is important. Nevertheless, there can be some tough clauses in the policy terms. So, it is necessary to opt out of plans which have such clauses to avoid rejection of the claim in the future.
Make Arrangements for The Premium
Before purchasing the best term insurance plan from these procedures, the final step will be to make arrangements for the premium payment. Sometimes people wonâ€™t have the liquidity to make payments right away because of savings and investment in bank accounts, gold, shares, etc. So, completing the procedures to obtain ready funds before purchasing will make the payments easier.
Keep The Previous Yearâ€™s ITR For Reference
Apart from these steps, there is an extra one for taxpayers. As the term insurance is eligible for tax deductions, keeping the previous yearâ€™s ITR in hand is important. It is helpful while filling out the insurance policy application as a reference and a budget.
These precautionary things that you need to complete while looking for the best term insurance plan will ensure that you can complete the allocation procedure with ease when you find a plan. They are also important to understand the expenditure and returns for term insurance. So, make use of these the next time you plan to purchase term insurance.
Author Bio: Vinod Gill is a writer who specializes in writing content on Finance and Banking subjects. He is a Digital Marketing Consultant, Blogger, and Co-Founder of Digital marketing Institute in Jaipur.