Why Term Insurance remains a Must Buy despite the Hike in Price
One can never foretell what the future holds, so you need to make sure that your family is financially secure in your absence. A term policy helps you prepare for such uncertainties. It is one of the most cost-effective methods by which you can mitigate risk. The reason for its popularity is its low premiums yet the family of the deceased gets the entire amount. The policy will provide your family the financial security they deserve in case of any unfortunate event.
In terms of the term plan products, India has lesser experience on data and experience, as they are relatively new in the market. The term insurance prices are mostly built on assumption and the assumption may not always hold through. Therefore, the term insurance plans are not rightly priced in India and need to be revisited. The reinsurers measure actual and the expected claims for the pricing and if the ratio is more than expected, it leads to a negative experience. This is the most important reason why there is a hike of 40% in the term life insurance pricing. The insurers increase the prices by refiling the existing insurance products to the regulator with specific changes. With several changes being incorporated, this is probably the best time for customers to buy term life insurance policy rather than going by the earlier you buy the lesser you pay strategy.
Hike in the Price for Term Insurance Premium
Buying a term plan is important if you are the sole bread earner in your family, you might have taken a large loan such as home loan, car loan or you may have any other obligations. In case of any unfortunate event, term plans help to cover the risk of repaying these loans. Having an adequate term insurance policy is the most cost-effective form of life cover. These are pure risk policies, and so you will not be entitled to any payout if you survive the policy tenure.
With a hike that will be seen in the coming months, people need to understand that such products are really important and become more essential if you have dependents. After witnessing the current situation, insurance companies might increase the premium again as the current hike is less than 40%. Term insurance helps fill the gap to secure your family, so don’t let slightly high premiums hamper you.
Things to keep in mind when buying a term insurance plan
- Choose the Right Cover
When choosing your term insurance plan amount you need to factor-in Monthly Expenses, Outstanding Loans, Future Expenses, Existing Insurance, Annual Income, and Savings. Also, one of the things which you should immediately do after receiving the policy is to check all the fine points and a copy of your medical examination. Nowadays, the term policy papers have your medical records. You need to go through each point and make sure things like your age, name, blood group, address and other important details are mentioned correctly in the policy.
- Get the Basic Version of the Term Policy
There is a variety of option available when it comes to term plans. The most basic term insurance plan is the one which pays you a lump sum on death. Most of the term insurance options are designed for very specific situations compared to the base policy. To check this, you can take the help of a term insurance premium calculator and find out the premium with rider and without a rider.
- Research about the Company
As you decide to purchase an online term plan, do thorough research on the plans available in the market. You can calculate and compare premiums and the features across the different insurance companies available in the market to choose the one which is best for you based on your requirements.