6 Things Not to Do While Buying Term Insurance

The Claim Settlement Ratio (CSR) is the percentage of claims settled by an insurance company out of the total claims received in a financial year. A higher ratio provides a better idea about how dependable the insurance provider is and how likely your family is to receive the claim after you.

However, the ratio alone is not sufficient; the actual volume of claims settled also helps assess the insurer’s reliability and consistency. A high claim settlement ratio coupled with a significant number of settled claims provides a more definite idea of the Company's credibility and consistency. A higher CSR is generally preferred, but it should be evaluated alongside the insurer’s claim volume, consistency over years, and overall service quality.

A term insurance plan not only protects your family in case of an unfortunate death but can also provide financial support during serious medical emergencies. Families may face significant financial strain due to a critical illness like cancer, heart disease or a major surgery.

Adding a critical illness rider provides a lump sum payout upon diagnosis of covered illnesses. This can be used to cover treatment costs and keep your family financially stable while recovering. Premiums paid for certain riders, including critical illness cover, may be eligible for tax benefits as per applicable tax laws, depending on policy structure

Basic life cover may not always be enough to meet your family’s future financial needs. Therefore, it is important to compare plans that offer valuable add-on benefits and flexible coverage options.

Some commonly available riders include:

• Waiver of Premium: Future premiums are waived if the policyholder suffers permanent disability while the policy benefits continue.
• Accidental Death Benefit: Provides an additional payout in case of the death of the policyholder due to an accident.
• Income Benefit: Beneficiaries can claim a monthly income instead of a one-time lump-sum payout.

You can also explore features such as terminal illness benefits, increasing cover options, and enhanced monthly income benefits based on your future goals.

Once you have considered all major features and benefits, check the premium costs of the shortlisted plans. Affordability is important, but choosing the cheapest policy should not come at the cost of adequate coverage or essential benefits.

Many insurance companies provide the option of paying premiums monthly, which may be easier if annual payments appear hard to afford. Auto-debit can also help you ensure that you don't miss premium payments. Further, the premiums paid on a term insurance may qualify for tax deductions as per the provisions of the Income Tax Act.

Your lifestyle plays an important role in determining the type and amount of coverage you may require. Your lifestyle directly influences both your premium and the level of coverage you need, depending on risk factors such as occupation, health condition, smoking habits, and hobbies.

People who work in hazardous occupations or have existing medical issues might want more coverage and other riders for better protection.

Your income directly affects both your premium affordability and the amount of life cover you should choose. When choosing a term insurance plan, consider factors such as income, future financial aspirations, debts, and dependents’ requirements.

Your coverage should be sufficient to replace income, clear outstanding loans, support living expenses, and meet long-term goals such as education and family obligations. The right plan should strike a balance between comprehensive coverage and affordability.