How to buy the right term insurance plan?
A good term insurance plan offers a series of benefits- it protects your investments, secures your family against financial distress and also comes with tax benefits.
One should aim at having a term insurance plan that has a sufficient cover, long policy term, critical illness benefit etc.
However, choosing a plan can be a challenging task if you are not well-versed with the available options. People often don’t get accurate answers to questions such as – “What type of term insurance plan to buy?”, “What should be the premium paying term?”, “How much cover is required?” etc., due to which they end up buying a plan which is not suitable to their needs.
Consider the following points before buying a term insurance plan:
- Buy a term insurance plan with an additional critical illness benefit: It is important to note that a term insurance plan can also cover you against critical illnesses in addition to providing you with a life cover. Critical illness benefit acts as a safety net. So, in case of an illness like heart problems, cancer and many other diseases, your savings and investments will remain intact. In ICICI Pru iProtect Smart, the optional critical illness^ pay-out can take care of your treatment cost without any hospitalization bills.
- Calculate the cover, practically: The cover amount should ensure that your family can manage their financial goals, maintain their present lifestyle and clear liabilities such as home loan etc. The cover should be typically 10-12 times your present income. You can calculate the same on various calculators available online. Click here to know your cover amount.
- Premium amount: The key to buying a good term insurance plan is starting early so that you can get a large cover for a lesser premium. There are various premium payment options like monthly, half-yearly and yearly. However, selecting a yearly payment mode is always cost-effective.
- Claim settlement ratio: Always look at the claim settlement ratio of the insurance company and the time frame in which they settle their claims so that your dependents don’t have to stress over it later. ICICI Prudential Life Insurance has a claim settlement ratio of 97.88%` and they take an average of 3 days** to settle the claim
^The critical illness benefit is an accelerated benefit and the death benefit will be reduced by the critical illness cover paid to the policyholder. The future premiums payable for the residual CI Benefit will reduce proportionately. In case the CI Benefit equal to the Death Benefit, the policy will terminate on payment of the CI Benefit. Only doctor’s certificate confirming diagnosis needs to be submitted. On payment of Angioplasty, if the CI Benefit is more than `5,00,000 the policy will continue for other CIs with CI Benefit reduced by Angioplasty payout. To know more about the illnesses covered, please refer to the Sales brochure. Available under Life and Health and All in One options.
Critical Illness Benefit is limited to age of 75 and Accidental Death Benefit is limited to age of 80.
`Claim statistics are for Financial Year 2017-18 and is computed basis individual claims settled over total individual claims for the financial year. For details, refer to Public Disclosures in our Website.
** The average TAT is calculated from the last document received to payment disbursal date for non-investigated claims. This is for the financial year 2017-18. Based on number of policies sold online between January 2016 – June 2016.
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