Are you looking for a reputable term insurance plan? Whether you are an Indian resident or an NRI, selecting the correct term insurance plan will provide financial protection for your loved ones. But what makes a term insurance policy genuinely good? Let’s look at the key elements you should examine to make an informed selection.
Features of a good term insurance plan
- Adequate coverage
A good term insurance for NRI or regular individuals should offer coverage that is sufficient to meet your family’s financial needs in your absence. It should cater for things such as unpaid bills, children’s schooling and tuition fees, and other day-to-day expenses. Normally, the sum assured should be between 10-15 of your annual income.
- Affordable premiums
High coverage is important, but the premiums should not be too expensive. Term insurance plans should be compared to identify one that provides the best value for money. An affordable premium guarantee that you can make the necessary payments without straining your pockets.
- Flexible policy term
The policy term should also correspond to your financial commitments and objectives. A good term insurance plan provides flexible policy terms, where one can select coverage for 10 years, 20 years, 30 years or till a certain age. This flexibility makes sure that the policy covers your long-term financial planning requirements.
- High claim settlement ratio
The claim settlement ratio is a crucial indicator of an insurer’s reliability. A good term insurance plan comes from an insurer with a high claim settlement ratio so that your family’s claim will be processed without hitch in your absence.
- Riders and add-ons
Riders help to expand the scope of your term insurance plan. Some of the riders are critical illness cover, accidental death benefit and waiver of premium. A good term insurance plan should offer a variety of riders, allowing you to customise the policy according to your specific needs.
- Tax benefits
Term insurance premiums paid in India are tax exempted under section 80C of the Income Tax Act. Also, the death benefit is tax-free under Section 10(10D). These tax benefits increase the financial utility of a good term insurance plan by lessening your tax burden.
- Easy application process
The term insurance plan should have a clear and easy process of enrollment. Most insurance companies have their application process online and it is easy to compare the insurance policies. Another sign of a good plan is when there is little paperwork and processing takes a short time.
- Critical illness cover
Critical illness riders can be added to the term insurance to help financially in the event of severe illness. This cover can cater for the medical bills and other incidental expenses incurred in the illness so as not to strain your pocket.
- Accidental death benefit
An accidental death benefit rider improves the amount of coverage if the policyholder dies as a result of an accident. This extra protection can help your family financially in the event of an unexpected accident, which makes it an important part of a good term insurance plan.
- Waiver of premium
This rider guarantees the continuation of your term insurance policy if you are unable to pay for the premiums due to disability or a critical illness. The insurer gives up future premiums, thus providing you with uninterrupted coverage without the need to pay for it.
- Option to increase coverage
A good term insurance plan gives the flexibility to increase the sum assured at major life events such as marriage, the birth of a child, or buying a house. This feature makes sure that your coverage caters for the changes in your financial obligations.
- Global coverage
In the case of NRIs, the term insurance must be able to provide coverage across the world. This implies that the policy will still be effective if you move to another country. Make sure that the insurer offers this feature to prevent any issues in the future.
- Graded sum assured
There are some term insurance plans which have a graded sum assured which means that the sum assured rises over time. This feature can assist in combating inflation so that the coverage amount is sufficient when the cost-of-living increases.
- Premium payment options
Flexible premium payment options are a hallmark of a good term insurance plan. Consider the flexibility of the premium payments where the plans should have provisions for monthly, quarterly, semi-annual or even annual payments.
- Return of premium
While normal term insurance plans do not have maturity benefits, some plans now have the return of premium feature. This means that if you live past the policy term, the amount paid as premiums is refunded to you, and therefore it is advantageous.
- Policy conversion option
Ideally, a good term insurance plan may have an option to convert it into a whole life or endowment policy. This feature can be useful if your requirements are dynamic, allowing for more freedom in adjusting your insurance plans.
- In-built terminal illness cover
Some term insurance policies include terminal illness coverage. If the policyholder is diagnosed with a terminal disease, a portion of the sum guaranteed is paid out right away. This function offers cash assistance during difficult times.
- Transparency in terms and conditions
A good term insurance plan is open about its terms and limitations. There should be no hidden terms or exclusions that might result in claim denial. Before purchasing, always read the policy material carefully and ask the insurer if you have any questions.
Ending note
Choosing a suitable term insurance plan requires taking into account a variety of factors, including appropriate coverage, low premiums, flexible policy terms, and a high claim settlement ratio. Riders like critical sickness coverage, accidental death benefits, and premium waivers provide considerable value. Tax benefits, worldwide coverage for NRIs, premium returns, and clarity in terms and conditions are also important considerations. By weighing these factors, you may choose a term insurance plan that offers comprehensive financial protection for your family, guaranteeing peace of mind and stability for the future.
