Life may be full of uncertainties, but that doesn’t mean that you can’t protect yourself against them using insurance. Life insurance plans and especially term plans at that act to bring regular income for you and your family when you are no longer capable of earning for yourself. However, when it comes to buying one, most of us fumble at making an informed decision. But not to worry, as there are several important things that help you choose the right type of insurance policy.
Claim settlement ratio is nothing but the percentage of claims paid per total claims filed in a year. It would be all the better if this ratio were to be higher, as it becomes easier for those dependent on you to claim the insurance in case of your absence. The sole purpose of term life insurance is reflected in the claim settlement ratio, as people buy insurance to secure their family’s future, and a higher claim settlement ratio means that the family’s future is secure. LIC term plan claim settlement ratio is highest (98.33% according to IRDA 2015-16 annual report)in all insurance provider company.
Although the claim settlement ratio acts to secure your family’s future, you must likewise check to see that a substantial number of claims have been settled. Only then will the claim settlement ratio be significant.
Solvency Ratio is the capability of the insurer you choose to settle your claims, should the need arise. If the insured person has suffered due to a natural disaster, the life insurer must be able to settle the claim amount in a very short amount of time. What this means is that the insured person must get a large sum of money in a very short span.
Death of a major earning member of the family can hinder its financial security. However, it isn’t the only time that the financial security of the family is in jeopardy. Major illnesses like cancer or brain tumors, wherein the person suffering the illness would have to go through a phase of major surgery can destroy the financial well-being of the family.
Therefore, such instances should be covered by a critical illnesses plan. They must be able to cover for any large medical expenses that tend to occur during that time while being able to sustain normal, daily living expenses.
All term insurances cover the most basic of expenses. However, most don’t necessarily cover anything beyond this. If you’re a person who is cautious about the financial security of the family, then you should go for best term plans that provide additional covers. These benefits include things such as waiver of premium, where, in case of permanent disability, you don’t have to pay the premium and remain covered by a term plan.
Or an accidental death benefit wherein a minimum sum assured is paid to your family members in case of your death by accident, most of the time, will be equal to the base sum assured. Or even an income benefit where your family members can receive regular income from the term plan, instead of a lump sum amount.
In many cases, you can even avail other benefits such as terminal illness benefits or the flexibility to increase the sum assured or perhaps, even the monthly income, once you attain a major milestone in your life.
Umakant is the is an entrepreneur disguised as a certified financial planner, author and blogger. His mission is help future generations achieve financial freedom by developing strong money habits and unleashing their entrepreneurial spirit.