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What You Need To Know About Term Insurance Before Adding Them To Your Portfolio

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By Author: Amrina AlShaikh
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Term insurance policies came into being with a simple goal. The policyholder's family will receive an assured amount upon the payee’s death. Its protection will stay for 65 years. And the premium will be paid only annually.
With the arrival of online insurance providers, things began getting complicated. At present, consumers are offered a vast array of choices; increasing cover policies, limited pay coverage, staggered return policies; the list is endless.
All this may appear confusing for an average person. Here are a few things you should know before adding term insurance to your portfolio:

Decide the coverage you need

Determine the coverage you want to have in the instance of your unfortunate death. To calculate it, you can do the following:

Calculate the expenses of your loved ones that are dependent on you. Multiply the amount with 150. This is done to take inflation into account.
Add all your liabilities.
Deduct the entire amount that you have in the form of stocks or any other asset.
...
... Calculate all the expenses you plan to undertake within a period of 15 years.
Decide the amount you would want your family to have after retirement.

Based on all these calculations, the total amount you get will help you decide the amount you want to have as coverage. 

Determine the duration of your plan

A decision on the duration of your term insurance should depend on the factors like: 

Your age: If you are a youngster, your premium will be relatively low with a longer tenure.
The age you expect to retire
Your present income
The increase of revenue you expect in the near future
Your financial obligations; for the present and for future
The large spending you expect to undertake in future


Do your due diligence

Do thorough research on the company of your choice. Check its track record, claim settlement ratio and the plans it offers. The best option is to go to an online aggregator, type in the necessary keywords, and search for available plans. If you stumble upon an ideal plan, read it thoroughly. You should know everything about it before making that final commitment. 

Consider adding a critical illness coverage

Your health insurance does not cover the cost of expensive treatments you may have to avail. This applies especially to those having pre-existing health conditions. Add a critical illness cover. Its premium is sure to be lower than the cost of a medical emergency. 

Be honest when filling up the application form

'Do not ever lie either to your doctor or to your lawyer, everyone says. But you should avoid lying also to your insurer. Don't try to hide your unhealthy habits like drinking or smoking. Doing so violates the contract. You may receive a waiver on the premium. But the relief is short-lived. Your insurer may find this out, and the agency will reject your claim. Thus be sure that the information you furnish in the application form is correct. You should also verify it before submitting it. 
The same applies to your health issues. Inform the insurer about all your health issues. If you hide any, the insurer may find that the reason for your death is a condition that you have not yet indicated in your form. If that happens, the agency will reject your claim. It may even make your policy invalid. Avoid such an unpleasant surprise and stay true to everything you say on your term insurance plan application form. 

Get it online

Buying a term insurance plan online is far better than getting it offline. Online plans are more affordable. Insurers offer utmost flexibility in the mode of payment for their online customers. This also lets you avoid middlemen and add up to your savings. Furthermore, the absence of paperwork makes the entire process time-saving and convenient. 
Lastly, make good use of the affordability a term insurance plan offers. Commit yourself to a policy after evaluating all your financial obligations. Otherwise, it may prove to be a strain on your budget. 
Go for a term insurance plan. It is affordable, definitive and guarantees financial strength in the instance of your untimely death. 

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