4 Things You May Not Have Considered When Buying Term Insurance

Here are some of the most common things that policyholder often forgets to take into consideration, but are definitely worth thinking over:

Buying the best term plan may not be as easy as comparing premium payments of different insurer’s plans and going with the cheaper premium option. When you have set off to buy term insurance, many factors come into play and determine how secure and financially settled your future could be.

Therefore, it is very important that you have a rational approach towards the whole process and do your due diligence when it comes to comparing insurers and different term insurance benefits as well.

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Here are some of the most common things that policyholder often forgets to take into consideration, but are definitely worth thinking over:

  1. For How Long Should I Buy Term Insurance?

When we are younger, there are a lot of financial responsibilities on our shoulders, and there is a higher possibility of loved ones being dependant on you. However, once you reach the retirement age, an important factor to consider here would be that not many would still be financially dependent on you anymore.

You would have a retirement or pension plan by then and enough savings over the years to financially protect your family without needing insurance coverage. Hence, it might make sense to buy term insurance only till your retirement and not till you get in your seventies or eighties.

  1. How Can Buying Term Insurance Be Difficult And Confusing?

Many people are still new to the insurance world, and they often end up searching what is term plan all about, and sometimes the kind of competitive ads that insurers run on the internet can get misleading. Most insurance companies have started breaking down their premium numbers on a daily basis, which then entices the reader to buy term insurance as the premium they can see is barely in double or triple digits.

However, keep in mind that those numbers are crunched, keeping a particular age group and an ideal policy tenure in mind. This ideally means that if you reach their page and run the actual calculations based on your current age and desired policy tenure, then the premium it will show on a daily or monthly basis might just be very different from what was advertised.

  1. Should I Go For Single Premium Policies Or Pay For Increased Premiums?

Many times, it so happens that because an individual can afford to buy the best term plan easily, then consider making a one-time premium payment for life. However, experts have proven that this might not be an ideal way of doing it. In most cases, a yearly premium payment frequency makes sense and is more legitimate than a one-time lump sum premium payment.

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Another thing that policyholders usually cringe upon is seeing their premium amount increasing, and sometimes they pay a single premium for the entire policy just to try and avoid that.

However, you should take the premium increase in a positive way because as you age, your medical history could also start increasing, especially if you fall under the high-risk category (smoker, alcoholic, chronic illness in the past). When an insurance company is being thorough with your term insurance premium at different stages of your life.

  1. How Important Are Riders When You Buy Term Insurance?

Riders are add-on benefits that a term plan offers to the policyholders, but they are often neglected by many. A good rider can be the difference between buying the best term plan that offers a holistic cover and a term plan plus another health insurance to help you gain additional coverage.

Consult an insurance advisor to help you select riders that would customise your term insurance plan to offer you maximum coverage and protection against health concerns and illnesses as well.

There are many riders out there, like critical illness rider, accidental disability benefit, waiver of premium, partial or complete disability, that you can add to your term insurance for a very nominal amount. If you have good riders, then you won’t need to buy an additional health insurance policy and pay hefty premiums, as your term insurance policy will cover that too.

Against popular belief, you must not buy the best term plan simply because it offers a deduction of premium under section 80C. While tax-saving is one of the benefits of a term insurance policy, it is not the core purpose of such plans. There are many other instruments out there that can help you save tax better if that is your only goal. However, if you buy term insurance, then you can enjoy the dual benefit of life coverage for your family’s future and tax benefits that are a part of it.

A term insurance plan, at its core, is a financial security cover that you buy to protect your family and help them survive financially, even in your absence. Make sure that you have considered all the above factors before deciding on your term insurance cover and insurer.


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