If you have followed my previous article on what is insurance and why insurance is important in individuals life then I am sure you are now interested to buy an insurance policy. But do you how to buy an insurance policy? Here I am using on term insurance and guide you accordingly.
Do you know there many insurance companies and banks out there who are selling term insurance plans online or offline. Then how to decide which company is best in case of term plans? Why you should ask this question to you is because the term plan we are buying now is actually not for the benefit of myself or individual. It will benefit your family, in case you die. So they have to deal with the insurance company from where you are planning to buy a term plan now. And you have to make sure that you are choosing the best without compromising on cost of premium and any other benefit.
Things to consider before buying a term insurance plan
Here I will share various factors to choose a term plan or to decide which company of good to buy a term insurance.
Company Reputation: The very first thing I want to tell is the reputation of the company,. from how many years the company is in this business and how is their general reputation in the market about insurance products. E.g. LIC is a very old name and trusted insurance company in India. Not only that, they have a very huge network of agents as well as branches in India so that you can approach anywhere with your issues, in case any.
Claim Settlement ratio (CSR): This is another factor which plays a major role to decide which company is best to buy an term insurance plan. Generally claim settlement ration high means, company has settled down most of the insurance claims. That’s where you have to play smart for the benefit of your family. Find out the company who has high claim settlement ration with good reputation, so that your family can get the claim easily if they required. But there are other factors too.
Number of Claim actually Settled: Although you might have think that what is the difference between this point and the previous point. The different is, if a company is settled 5 out 5 claims in a year they they will get a CSR of 100%. But this is not a good data to judge the company. Where another company might settle 99 out of 100 claims, where their CSR is 99%. Now you have to consider this fact also to know why claims are more for a particular company and they are less. There might be reputation and more network could be the factor.
Solvency ratio: This is another technical factor which will tell how stable the company is from financial point of view. E.g. if the company has faced huge insurance claims in a period from their expected number, can the company is enough cash flow to settle them all in case all the claims are genuine?
Cost of Premium: Are you still confused among 2-3 insurance companies after comparing all the previously mentioned factors? Then the next thing you should look for is the premium rate for a certain amount of sum assured. Obviously go for the cheapest term insurance plan among all your compared insurance companies.
Additional features: Now a days there are many term insurance plans are coming with various additional features like additional riders, monthly income option, additional life cover, term insurance plan with return of premium etc. now you can explore them and choose the one as per you need and also you think it will benefit you.
Convenience to operate: Gone are the days when you have to wait for your agents to come and explain your insurance policy, fill the form and even collecting the premium. Now things has been changed like anything. If you are buying a term plan online, then look around explore various options available or not like reading complete details of policy, terms & conditions, online premium payment, sms alert, how to fill the form online guide etc so that one can easily buy a term plan online without the help of insurance agent. This will simply save your time & money and also educate you with the plan you have purchased which is a must need.
You might be thinking that choosing the best term plan is an herculean task after reading this. But believe me, its very easy as soon as you are comfortable with these terms once. Personally I opted for HDFC life Click 2 Protect plus term plan as per my analysis and requirement. If you want to pay little extra premium and stay with the best insurance company, then go for LIC E Term plan.
Share your thoughts and experience with term plan in India by writing a simple comment below. Also mention in case you think there are other factors to decide which is the best term insurance plan in current market. or any other tips to choose the best term plan in India.