of term plan is as important as knowing the amount of cover. An insurance policy should at least give the cover to the policy holder till his retirement. However, people now intend to work even after reaching age of 60. Besides, late marriages and having children at higher age makes responsibilities not to end at age of 60. According to insurance experts, a person needs a cover up to the age of 65. It is advised to take a term plan which gives you flexibility to fix the tenure as circumstances vary from person to person. Many term policies offer fixed tenures of 15, 20, 25 or 30 years and some don’t provide cover beyond age of 60. Like a person of age of 33 will not be entitled for a 30 years term plan & he has to take a 25 years plan which end at the age of 58.
So, it is good to stay away from such plans and go for one which customize according to your needs.
Also factor the inflation
At the time of purchasing a term plan, do consider the inflation factor with it. A cover of Rs 50 lakhs looks sufficient in today’s scenario but after 20 years, may be amount seems inadequate due to rising inflation. To get over this problem, many companies offer plans in which your cover will increase by 5 – 10% every year. However, premium of such type of plans is more than the normal plans. A better way is to review your insurance need after few years and accordingly add more cover if needed.
Go for online Term Plan
Nowadays when every insurance company has launched its online term policy, it’s better to opt use such facility. There are two benefits of choosing online policy: one is you can choose after analyzing all the plans and second is, it is more cost – effective as no broker or dealer is linked which in other way save broker charges.
Choose the most economic plan
If we compare plans of different companies, then we will find their premium charges to be different. It is advised to choose the most economical plan from all the companies. If you prefer any of the company, then do compare that it would not cost very much than the other company’s plan. However, if the claim ration is good in any specific company then you can prefer that over others.