Term insurance is one of the most important financial products you can buy to secure your family’s future in case of your untimely demise. Term insurance plan offers a lump sum amount to your nominee or beneficiary if you die during the policy term. The amount of term insurance coverage (sum assured) depends on your income, liabilities, and financial goals. Term insurance plans are also very affordable, offering high coverage at low premiums.
However, with so many term insurance plans available in the market, how do you choose the best one for yourself? How do you compare and evaluate different term plan quotes to find the most suitable option? Here are some tips to help you evaluate the term plan quote and make an informed decision.
Tips to Evaluate Term Plan
1. Compare the Coverage and Benefits
Compare the sum assured, policy term, premium payment term, death benefit options, and riders of different plans. You should also check the plans’ eligibility criteria, exclusions, and waiting periods.
The sum assured should be adequate to cover your family’s expenses and liabilities in your absence. The policy term must be long enough to cover your working years and retirement age. The premium payment term should be convenient and flexible for you. The death benefit options should suit your family’s needs and preferences.
For example, some term plans offer a lump sum payment, some provide monthly income, and some offer both.
2. Compare the Premium Rates
Use the term plan calculator to compare the premium rates of various plans for the same sum assured, policy term, and death benefit option. You should also check the premium payment frequency, mode, and discounts offered by the plans.
The premium rates of term insurance plans depend on various factors such as your age, gender, health, lifestyle, occupation, etc. The premium rates also vary from insurer to insurer based on their underwriting and pricing policies.
When comparing plans, you can look for discounts and offers that can reduce your premium amount. For example, some plans offer lower premiums for non-smokers, online buyers, women, etc.
3. Compare the Claim Settlement Ratio and Customer Service
The last thing you should look at when evaluating term plan quotes is the insurer’s claim settlement ratio and customer service. You should compare the claim settlement ratio, claim settlement time, claim settlement process, and customer service of different insurers. You should also check the reviews and ratings of the insurers and their plans.
Let’s have a look at all these elements for better understanding!
- Claim settlement ratio: The claim settlement ratio refers to the actual percentage of claims settled by the life insurer out of all the claims received in a year. It indicates the reliability and efficiency of the insurer in settling the claims. The higher this ratio, the better it is for you. Looking for insurers with a high and consistent claim settlement ratio above 90% would be best.
- Claim settlement time: The claim settlement time is the duration the insurer takes to settle the claim after receiving all the required documents and information. It indicates the speed and convenience of the claim settlement process. The shorter the claim settlement time, the better it is for you. Go for insurers that settle the claims within 15 to 30 days.
- Claim settlement process: The claim settlement process is the procedure the insurer follows to verify and settle the claim. It indicates the ease and transparency of the claim settlement process. The simpler the claim settlement process, the better it is for you. Look for insurers that have a hassle-free and online claim settlement process.
- Customer service: Customer service is the quality and responsiveness of the insurer while handling your queries, complaints, and feedback. It indicates the satisfaction and trust of the customers. The better the customer service, the better it is for you. Look for insurers that have 24/7 and multilingual customer service.
Term insurance is a crucial financial product that can protect your family from any unforeseen eventuality. However, choosing the best term insurance plan can be daunting because you must consider many factors while making comparisons. Using a term insurance calculator to compare different term plan quotes from various insurers would be best. Remember to evaluate the term plan quote based on the coverage, premium rates, claim settlement ratio and customer service of the plans. You should choose the term plan quote that offers the best coverage at the best price and from the best insurer. Read the policy document carefully and understand the terms and conditions before buying the plan.