A term plan is a pure form of a life insurance policy. If you are not sure of what is term insurance plan, it is a policy that pays the benefit only in case of an unfortunate event. It is an affordable plan that ensures the financial safety of your loved ones in case you cannot be there for them.
If you are planning to buy a term plan, you need to keep certain things in mind. Here is a list of do’s and don’ts to guide you:
- Do not forget to review the policy
Analysing your policy on a timely basis is essential to ensure that you are getting precisely what you need. Your requirements may change over time, and you need to adjust the term plan accordingly. Otherwise, the policy will not prove to be helpful in the future. Reviewing the policy is also essential to make sure that you are not paying more than what is required. Whenbuying the term plan, be sure that it is offering sufficient monetary coverage and other additional features as per your expectations. If there are any unwanted features, exclude them, and lower the price of the policy. Lastly, keep an eye on your bank statement to always be aware of the automatically deducted charges by the insurer. You can avoid some of them.
- Do consider annual payment
A term life insurance policy comes with different payment options like one-time premium, monthly premium, and annual premium. While the one-time payment option can be hassle-free, it might not be a financially sound decision for everyone. If you want to pay for the term plan with regular premiums, consider the yearly payment alternative. The monthly premiums attract additional services charges, as you are paying them multiple times a year. This can add up to a higher amount compared to the yearly payment option. You can compare the two options to find out which is more economical. In the end, choose the appropriate option.
- Do find out about the deductibles
When you are buying a term insurance policy, make sure to find out about its deductibles. A deductible is a certain amount that you have to pay from your pocket. You can select the amount depending on your ability to pay. If you agree for a higher deductible, the premium will be comparatively lower. Conversely, a reduced deductible means a higher premium. This is why you must find all the information regarding deductibles before buying a policy. Doing so will help you avail of a suitable term plan as per your requirements.
- Do not let the policy lapse
To keep the term insurance policy active, you need to pay the premium on time. Failing to do so results in policy lapse, which means you cannot enjoy its benefits anymore. If that happens, the premiums will increase when you renew the policy. Understandabley, certain financial emergencies can lead to the non-payment of premiums. However, you can easily sort out this issue. If you cannot pay the premium on time, contact your insurer and find out if they allow partial payment or readjust the due date. Insurers often provide a grace period for payment after the due date.
- Do check the policy’s features before buying
Term plans may come with additional features, like riders (add-ons). Before purchasing a policy, make sure to check which add-ons are available and if you actually need any of them.
When you decide to buy a term life insurance policy, do so from the insurer’s website. Purchasing online can help you save a lot of time. Moreover, it can prove much more cost-effective as compared to buying a policy through an agent.