Whenever you go shopping, you prefer buying things according to your liking and preference. For instance, if you are shopping for groceries, then you are going to first choose between veg and non-veg food. Based on that information, you will create a shopping list. This list will be unique and different for everyone.
Similarly, you will have to personalise your term insurance plan in a way that is appropriate for covering your needs and requirements. Your term insurance policy will be unique based on your family’s financial situation and other factors.
Let’s take a look at the things you should remember while selecting the best term insurance policy for you and your loved ones.
Frequency Of Premium
All the insurance companies permit their customers to select from various payment modes based on their convenience for term insurance plans. People opting for a term insurance plan can pay premiums yearly, half-yearly, quarterly, or monthly.
From observations, there is a minor or no price difference in the final amount that’s due. If the financial situation is muddled, then you can select monthly payment options and pay without any financial burden. Make sure you set up automatic debits for your premium payments. Because if you forget to pay premiums timely, then the policy will lapse, and you will lose out on the coverage.
Choose your payout option
When you buy a term insurance plan, you get to choose from a few options for the claim payout. You can choose as per your family’s needs and necessities.
There are three types of claim payout options: Lump sum payout, monthly income payout, and monthly income plus lump sum payout. You can choose how your family can receive the claim payout during settlement.
Lump sum payout:
If you select this claim settlement option, then the entire amount as per your term policy will be transferred to the nominee’s bank account. If you have liabilities and debts like credit card bills and loans, then you can choose this payout option as your family will not have to bear this burden, and they can pay off all the debts easily.
Monthly income payout:
If you choose this mode of payout, then your family will receive a fixed monthly amount for a certain term every month. If your family is going to need money for daily and monthly needs, then they can make use of this money. If your family members depend on you as a sole earner, then go with this payout option.
Lump sum with monthly income payout:
In this mode, your family will get a certain amount of money from your overall claim amount, with which they can clear off small debts and liabilities. Along with that, they will receive a monthly amount for taking care of daily expenses for a set amount of time.
Paying off premiums quicker
Whenever you buy a term insurance plan, you usually pay premiums till the policy ends. However, you can also make larger instalments towards premiums and pay them off much sooner than the policy ends. This is called Limited Pay. If you have a large surplus of money, then you can choose to avail of Limited Pay and pay off all the premiums through larger instalments.