Are you thinking of buying a term life insurance plan? Before making a decision, you must know how beneficial an insurance plan will be for you and your family. According to a recent survey, most people buy term life insurance plans for tax saving and death benefits. There is no doubt that term life insurance is a better way to save tax. And it also protects the future of your family. Term life insurance takes care of your family after you go. It provides financial assistance to your family in difficult times. All of us need to understand that life insurance is a bond of trust.
Before you know or buy a term plan, it is very important to understand what you really want from the policy. Remember, life insurance is an essential financial product, so you would not like to make any mistakes while deciding. Here are some important tips that you should focus on when you buy term life insurance to help you.
Calculate the right sum assured:
How much amount of term life insurance do I need? This is a question faced by every person who thinks of buying a term life insurance policy. There is a basic rule for this, the death benefit of your policy should be from 7 to 15-20 times your annual salary. But like any other basic rule, it's not always perfect. It is important here that you must ask the insurance company what will be taken care of to consider your sum assured amount. Never rely fully on everything mentioned by the insurance company. Make sure that the logic that the company is making is looking right to you. There is also another way to find out how much, even the same assured you need. You think about how much income you want to take care of your spouse or family in your absence.
Choose the appropriate Policy term:
After deciding the same assured, the next big step will be to decide how long you need assurance. If you want your spouse to send children to college even after you don't have income and your family is going to have a comfortable life, buy term insurance for the period until you feel that you will continue to work or earn money. For example, if you are thinking of working by the age of 65, you buy a cover that will provide you with a cover by then. If you want to work till the age of 70 years, you should buy a plan that covers you for 70 years. Always discuss your circumstances and plans in detail with your insurance company. This will help you better in detecting proper coverage. If you are thinking of a will and want to leave something for your legal successor, you should invest in the entire term life insurance plan. This plan gives you cover up to 99 years and above.
Think about pay-out options:
Initially, life insurance was considered the simplest financial product as it paid a lump sum to its beneficiaries on the death of the insured. However, things have changed considerably now. Insurance companies have started giving several options for payment. The objective is to provide sum assured to the beneficiaries through various options as per their benefits. In addition to the regular lump time payment scheme, beneficiaries can also opt for a different payment scheme, i.e., pay-out. People can also customize the plan as per his special needs and needs. Various options have made it easier to understand term plan payments. For dependents who cannot take big economic decisions, the option of payment in installments is better. In the option of payment in installments, the beneficiary receives some share or percentage of the total sum assured as a lump sum amount and the balance amount is provided as a monthly payment in the pre-determined period. In general, this period is for 15-20 years.
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