New Delhi: After the Corona crisis, the number of people buying term insurance plans has increased. The decision to take out term insurance should be made very carefully, not in a hurry. We should evaluate whether we need a term policy. Maturity benefit is not available in this insurance, although it does provide financial security to the family after the death of the policyholder.
It is important to first understand what a term policy is. Term insurance provides coverage at a fixed rate of payment for a limited period. If the policyholder dies during the term of the policy, the amount of death benefit is paid to the nominee. It is very important to understand that term insurance is not an investment. This benefits the family after the death of the policyholder.
When assessing the sum insured you should consider the source of income, current debts and liabilities, family members, children’s higher education, their marriage, retirement, etc. Term insurance cover should be at least 10 times your annual income.
When taking out a policy, look at the claim settlement ratio of the insurance company. Buy insurance from a company that has an excellent claim settlement ratio. In fact, the claim settlement ratio shows what percentage of total insurance claims were settled by the insurance company last year.
The insurance company should always provide the correct information. Insurance companies say that there is a problem in settling a claim due to misinformation provided by the policyholders.
Buy rider or add-on benefits when needed. Policyrider or add-on benefits means no affiliation with any insurance policy. However, the cost of the premium increases with the rider, so include the rider when there is a great need.
The male insured should take out a term insurance plan under the Married Women’s Property Act, 1874 (MWP Act). A term policy taken under the MWP Act is considered a trust. Only the trustees are entitled to the amount of the policy benefit. In the event of a death claim, the trust receives money from the policy, which can only be claimed by the trustee. No creditor or relative can claim it. The trust keeps the claim amount only for the spouse and / or children.