4 factors to help you compare term insurance plans
When you are young, you don’t feel the need to plan for an unfortunate event like death. However, as you grow older, your life turns intense as you shoulder more and more responsibility with each passing day. Hence, it becomes essential to have a back-up plan to coverevery life stage.
Securing the financial needs of your loved ones forms the basis of having a back-up plan. One of the most effective ways to provide financial back-upto your family members is by purchasing a term life insurance. A term insurance is a pure protection insurance plan that covers the risk of loss of income due to the death of the policyholder. However, you cannot pick a random term insurance to safeguard your family. First, you should research and then compare different term plans on specific factors. Let’s take a look at these four essential factors of comparison mentioned below:
- Base Cost
Under term insurance, the base cost is calculated by factoring in the mortality rate of a geographical area or a particular region. As the mortality rate of the region changes, the base cost of a term plan will change. However, the insurance related costs also vary depending on differing things as follows:
- Additional rider
- Loyalty additions discount
- Total premium payment
Note: Term plans provide different premium rates, which depends on the term insurance benefits, over the base policy. Hence, purchase a term plan with comprehensive benefits based on your requirements and financial goals.
- Claim Settlement Ratio (CSR)
A CSR Ratio is the total number of claims settled by an insurance company to the total number of claims that it receives per year. It also highlights the percentage of claims, which have been paid by your insurance company. An insurance company with a high CSR indicates that it is more likely to settle a legitimate claim. Ideally, a reputable insurance provider will have a high CSR if it has worked in the insurance sector for a longer duration. Therefore, choose an insurer with a high CSR since it will not jeopardize the chances of your claim from being honored.
- Persistency Ratio
While a claim settlement ratio is a critical factor of purchasing a term plan, it should not be the only factor behind your buying decision. As a buyer, you should look for a 13th month persistency ratio in your insurer’s profile. A 13th month persistency ratio will give a brief idea of how willing customers are to stick to their term insurance policy. The persistency ratio marks the credibility of an insurance company. For instance, if your insurance provider has a high persistency ratio, it means that their customers are largely satisfied with the term plan and will continue the policy in the long run.
- Claim Payment
Term insurance will offer a death benefit to your nominees in the case of your death. Hence, in such a scenario, timely claim settlement of a term plan is necessary. Moreover, if the claim settlement procedure is hassle-free, it will ensure the right peace of mind as well as will reduce their burden. Today, many insurance companies focus on hastening the claim settlement process for your betterment in times of need. Look for those insurance companies, which offer 24×7 assistance along with quick claim settlement.
Conclusion:
In a nutshell, evaluate your financial requirement before choosing a term insurance policy for your loved ones. Compare several online term plans and buy only that plan, which perfectly aligns with the financial goals of your family members. In simple terms, spending more time on comparing the term insurance benefits could ensure better financial security for your dear ones in your absence.
