Buying a term insurance policy is the most responsible step in protecting your loved ones financially. It provides a high life cover at an affordable premium, making it one of India’s most popular forms of life insurance.
However, with so many policies and providers available today, how does one determine which policy is the best choice for them?
In this guide, we will discuss the things you should consider before buying term insurance online and explain why you might want to pair your term insurance plan with a guaranteed return investment plan.
Key Factors to Consider Before Purchasing Term Insurance
A term insurance policy may seem simple—pay premiums and your family gets a lump sum if something happens to you. Nevertheless, not all policies provide the same benefits and not all individuals need the same thing.
These are the essential aspects to consider:
- Adequate Cover Amount (Sum Assured)
Your sum assured should be sufficient to cover your family’s long-term needs. These usually include living expenses, children’s education, outstanding loans, and future goals. A good rule of thumb is to opt for a cover of at least 10-15 times your annual income.
- Policy Duration
Term insurance can be taken for durations ranging from 10 years to even 40 years or up to a specific age, like 65 or 75. Choose a term that covers your working life and ensures your dependents are financially protected during the vulnerable years.
- Premium Affordability
Look for a plan that offers the best value, not necessarily the lowest price. The premium should be affordable for the long run, especially if you opt for a long-duration plan.
When comparing term insurance online, check if the premiums remain constant throughout or increase over time.
- Claim Settlement Ratio
This is one of the most important parameters. The claim settlement ratio reflects the insurer’s reliability. A ratio above 95% is generally considered safe. Always check the latest IRDAI (Insurance Regulatory and Development Authority of India) reports for verified figures.
- Riders and Add-ons
Customise your policy using riders like:
- Accidental death benefit
- Critical illness cover
- Waiver of premium
- Terminal illness rider
These may increase your premium slightly but provide extra protection tailored to your needs.
- Flexibility and Conversion Options
Choose a term insurance policy that allows changes as your life evolves. Some policies allow you to convert term plans to whole life or endowment plans later. Flexibility in premium payments (monthly, quarterly, annually) is another factor to consider.
Checklist for Selecting the Best Term Insurance
Here’s a quick checklist to refer to when you’re ready to buy term insurance online:
✔ Define your coverage requirement based on financial obligations
✔ Decide policy tenure based on your retirement and income span
✔ Compare premiums on official insurance aggregator websites
✔ Check the insurer’s claim settlement ratio and customer reviews
✔ Choose riders based on your lifestyle and health risks
✔ Ensure ease of claim processing (online claims, quick turnaround)
✔ Read the policy’s fine print for exclusions and terms
✔ Verify whether medical tests are required (avoid non-medical policies unless young and healthy)
✔ Use online tools to calculate the premium and benefit projection
✔ Ensure IRDAI regulates the insurer
Buying term insurance online offers you the advantage of transparency, easy comparison, and often, lower premiums.
Why You Should Also Consider a Guaranteed Returns Plan?
While term insurance offers pure protection, it has no maturity or survival benefit. For individuals looking to combine protection with savings, a guaranteed return investment plan may be an excellent add-on to their financial portfolio.
Here’s why:
- Dual Benefit – Insurance + Investment
A guaranteed return insurance policy provides a life cover like a term plan but also returns a lump sum at maturity. This ensures your money doesn’t go to waste even if you survive the policy term.
- Guaranteed Income or Lump Sum
You can receive payouts through monthly income, annual bonuses, or a one-time maturity benefit. This adds a layer of financial security for life goals like education, weddings, or post-retirement income.
- Tax Benefits
Just like term insurance, guaranteed return investment plans offer tax exemptions under Section 80C and maturity benefits under Section 10(10D), provided conditions are met.
- Low-Risk Investment with Predictable Returns
These plans offer peace of mind for risk-averse individuals. Unlike mutual funds or stocks, the return is fixed and declared at the outset.
That said, guaranteed plans usually have higher premiums and a lower life cover than a pure term plan. Therefore, they should not replace term insurance but rather complement it.
Choosing the right term insurance policy can be life-changing—not for you, but for your family’s future. With so many options available today, taking time to evaluate your needs, read the fine print, and compare options is not just advisable, it’s essential.
Ultimately, the right mix of term insurance and long-term planning can provide peace of mind—not just for you, but for those you love most.
