Buying term insurance? Know how to choose the best plan - Benefits explained
Term insurance plan is simply a life insurance product. It provides financial security to the family of the insured person in case of death of the policyholder.
Term insurance plan is simply a life insurance product with lower premiums. It provides financial security to the family of the insured person in case of death of the policyholder during the term of the policy. If you are an earning person and your family members are financially dependent on you, then you should immediately buy a term insurance plan.
Many people wonder about the right time or age for buying a term insurance plan. Pankaj Mathpal, Managing Director, Optima Money Managers, said that it's good for a person to buy a term insurance plan as early as he can.
"The premium is low if the policy starts at the younger age and remains constant through the term. Therefore, it should be bought immediately once you start earning and your family is dependent on your income," he said.
When asked how to choose the best term insurance plan, Mathpal said, "Claim settlement ratio of the insurer and premium are two important things to be considered while selecting a right plan for you. Also, the plan should cover you throughout your earning life".
The market is flooded with options and people often get confused between term insurance and a life insurance plan with maturity benefits.
"Term insurance is the best form of life insurance. The key objective of life insurance is to provide financial support to the dependents in case of untimely death of the life assured as it offers large sum assured with small premium the policyholder pays. Life insurance plans with maturity benefits neither serve the purpose of insurance nor the investment as the life cover in such plans is not adequate and returns from such life insurance policies are poor," explained Mathpal.
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But can one buy a Term Insurance plan for children too? Mathpal said children can neither get term insurance policies on their life nor they need it, if they don't have income. Term insurance plan can be underwritten only on the life of an earning person.