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 life
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 and prices.
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 years.
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).