While looking for a term insurance plan, people generally compare the price offered by various insurance companies. Price is, after all, a highly important deciding factor. One tip to decrease the cost is choosing an online term plan, which is cheaper, as there is no involvement of an agent whose commission adds up to the entire plan.

But if you only consider the price and ignore other essential factors, you may end up comprising the financial security of your family. To ensure that the future of your family is not affected, there is a list of some crucial features to help you in selecting the best term insurance plan or the right online term plan


  1. Solvency Ratio 



It tells you whether an insurer is financially capable to settle the claim in case the need arises. IRDAI makes it compulsory for every life insurance company to maintain the solvency ratio of a minimum of 1.5. This is important because when the insurer will obtain huge number of claims in short time span, such as in case of natural disaster, an insurer with low solvency ratio would not be able to settle claims quickly.

 So, if you do not want your family to suffer in case of an emergency, consider the solvency ratio. Yes, the likelihood of a natural disaster ruining everything is highly unlikely, but doing so is important considering the uncertainties climate change brings along.


  1. Claim Settlement Ratio 



It shows the proportion of claims settled out of the complete filed cases in a year. A higher ratio implies that it will be easier for your survivors to claim the insurance amount in your absence and lead on their lives comfortably. You should also consider the total number of cases an insurer has solved. 

The aim of investing in term plan is to make sure that your loved ones do not suffer in your absence. A high claim settlement ratio means your family’s financial future is more secured. Also, you should disclose all your health comditions, lifestyle, income, etc. while investing in the policy so that when the company cannot deny to settle your claim. 


  1. Additional Covers 



Every life insurance plan will offer a basic life cover but if you want complete financial security for your loved ones, you should choose a term plan with comprehensive benefits and cover. The added benefits to look for are – 


  • Accidental death – This benefit raises the sum assured in case the death takes place due to an accident. 

  • Waiver of premium – Here, life insurance cover will not cease if you are unable to pay the premium due to permanent disability.

  • Income benefit – Some plans let your family members receive a regular income instead of a lump sum amount. If you wish that your loved ones get a monthly income in your absence, you should look for this feature. 



Apart from these, there are several other benefits to consider, such as terminal illness benefit, increasing monthly income benefit, and flexibility to raise sum assured at certain milestones. 


  1. Critical Illness Cover 



Death is not the only major event where the bread-winner’s family needs money. Fighting a critical illness like brain surgery or cancer can drain your finances and cripple the overall financial situation of your family. In critical illness cover, the cover amount is paid immediately on diagnosis upon submission of medical documents proving the same. 

The amount can be used to cover high costs of the treatment and make sure your family has sufficient amount of money to sustain their regular everyday life. The premiums paid against cricital illness cover are eligble for rebate under u/s 80D. 


  1. Term 



The term of the plan is an important aspect while choosing a policy. Ideally, you should buy a policy until the age you plan to work. Earlier the retirement age used to be 60 years but now people prefer to work till 65 years because they get married late, they have kids late, and their financial requiements are more.

 The idea to choose the tenure of the policy upto your retirement age is that by the time you retire, your financial responsibilities reduce, your loans are paid off, and so, you do not require as much money after a certain age. However, you should invest in the policy at a young age because during your youth, you are healthier. And if you are healthier, your premiums would cost lesser. Premium and age have a direct relationship. The more is your age, the more will be the premium. 


  1. Sum  



Term insurance should be able to cover your outstanding loans as well as income. The general rule of thumb is to choose the sum that is 8-10 times your yearly income plus your outstanding debts. This is important because, in case of demise, an insufficient sum assured would mean the family has to struggle to pay off the debt and maintain their lifestyle like it was before the demise. 


  1. Premiums



You will be offered varying premiums bt different insurance companies for the total cover your require. However, you must know that low premiums do not guarantee the liability of the insurer and your plan’s efficinety. It is better to pay higher premiums to reputed insurance companies with higher claim settlement ratio. You may be quoted higher premium prices because of additional benefits the company is offering. 

New companies tend to charge lower premiums to build customer base. But they cannot be relied upon. However, this does not mean such companies will not function efficiently. So, while choosing a policy, consider the premium amount. If the company is charging higher premiums, know the reason behind it and then decide for yourself. Avoid going for the policy with lowest premiums. 

Conclusion 

Once you have analyzed term insurance plans on the basis of the above-mentioned parameters and narrowed down your choices to a few, then you should look at the cost to make the final decision. However, you must not compromise on any of these parameters just due to cost. Also, you must know that you receive tax deductions for term insurance premiums. 

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