Choosing Best Term Plan

How to choose best term plan?

As it has always been mentioned by financial experts there is no best financial product be it mutual fund or insurance. If they are best today there is no guarantee that they will be best when we will need those most. So as a client you have to stick to some basic principals while choosing the products. So let’s check this for term plans.

Important factors in choosing term insurance plan

1 Claim settlement Ratio: The most important criteria of selecting any insurance policy including term plan is claim settlement ratio. Why we are buying life insurance? If I am not there my family will get the sum assured & have financial security. But what will happen if our claim gets denied – whole purpose of taking term plan will be defeated. So it’s better to check it rather than sorry.

How can you reduce chances of claim rejection?

1.      Don’t allow agent to play checkers. If you are buying term plan there is 90% chances that you called the agent. He is in very hurry to fill the form & pocket his commission.

2.      Don’t hide anything – if you smoke or drink mention it – if you have any other medical ailment disclose it.(even if you think it is very small)

3.      Mention which other life insurance policies that you hold – from any insurance company including ulip & endowment.

        If you follow these points there is a good chance that your claim will not be declined.

2 Reputation of the company – there is no definition or cannot be easily explained as it depends on 2 factors working style/financial health of the company & your past experience. So it is very subjective & changes with the time but still will be considered to increase your confidence. Or take it other way round there are 10-15 good insurance companies & you are not having confidence on 2 of them you can eliminate them from total choices.

3 Low Premium – People think this is the most important criteria but actually it is least important. This criterion should be explored only when you have shortlisted polices on above 2 points.

So this way you can reach the term plan that you should buy.

In Financial Planning there are many strategies that can be followed to make sure that you are adequately insured & your claims will not be denied but there is a very simple strategy that we think everyone should follow.

Divide your Term Plan into 2 parts:

There are lots of benefits of this strategy.

1 In case if in future you realize that your sum assured is more you can discontinue one of the policies. This can happen due to either demotion or loss in job OR a windfall profit that you get which was not anticipated.

2 In case one of the insurance claims got denied or delayed still your family has a chance that they will not lose everything.

3 If you have rightly filled details in the forms & one of your claims got denied – your family or your advisor can reach insurance ombudsman that claim got passed from X co but Y co has denied it. Your family has a great chance that even this claim will be passed if followed properly.

Now,you know how and which term plan to choose. Reach your financial advisor & ask him to calculate your insurance requirement. Go for it and believe me your approach to life will change.