Life insurance can be a tricky subject to navigate, especially considering how many different options there are. How do you choose what term plan is the right one to choose? The insurance industry offers a variety of term plans, and thanks to this variety, there is something for every individual.
The first step towards selecting the correct plan is to
hone your focus on specific key features that you want, and that will be able
to make a significant difference to you and your family.
Below are the key features which can be focused on:
The value of human
The purpose of life insurance is to ensure that your
dependents are covered and supported, should anything happen to you. Human life
value is known as HVL in insurance terms. This is calculated by using the
income or salary and liabilities. These two form the foundation, and you need
to ensure that your plan will at least cover your HVL calculation.
Term insurance plans are known as one of the most
affordable options. Shop around for a term plan that covers your needs, as
there are different term plans that have different pricings.
You should consider the different riders that you can
select to add on to your primary plan. The policyholder is able to attach
riders to their policy, and can be used to cover critical illness, loss of employment,
and even disability cover.
This feature is handy if you want to begin with a moderate
coverage and upgrade it in the event of marriage or children.
The above are essential features and aspects to consider
before selecting a term plan. Now, we will take a brief look at the different
types of term plans on offer. These are by no means all of them, and some
insurers won’t offer all these types of options, but they are the most popular
types of term plans widely available.
Offline term plan
The offline term insurance is a low-cost option, although
not commonly found or marketed.
Online term plan
Another low-cost option, this plan is usually even more
affordable than the offline policy. There is no intermediary, and the policyholder
is generally a low-risk participant. Usually, only those who are well-educated,
have a decent paying job, and hold health insurance will qualify for this.
With this term plan, the cover increases against
inflation, in order to beat inflation. However, the cost of this term plan may
not be justified against a regular plan, do your homework, and compare coverage
This type of plan requires an initial lump sum. The single
premium caters to those that are intending to invest in their life
insurance as a once-off payment, and not be tied into commitment.
Another option is known as the imitated payment plan,
where the lump sum is divided up into payment chunks over the course of 5 or 10
When it comes to the manner in which the payments payout,
you can choose between staggered payouts (where it takes 5 – 10 years for the
sum to be paid out) or return of premium plan option (where the entire premium
is paid out in a lump sum).
About The Author
Vipul is a professional blogger and online advertiser based out of Bengaluru, India. Always in a quest for new ways to make money, Vipul detail out all possible opportunities that can help anyone to earn passive income online. You can connect on Twitter, Linkedin & Facebook