By Vinay Taluja
The situation the whole world is facing currently is beyond the control of human beings. It will be best termed as ‘exceptional times’ of life and the Government of India is taking all necessary measures to control the impact of COVID-19 in India. The 21 days lockdown from 25th March 2020 is one of the examples of the same. The pace may slow down for the next few days but the courage to bring everything to normal will remain alive.
In such exceptional times, we all need exceptional protection covers. Though for the next 21 days we all have to stay at home how we can ensure that our family is fully protected from all possible uncertainties that could bring any financial emergency in their life.
At a very nominal cost depending on your age and a few other factors, you can ensure your family’s financial safety by buying the term insurance for your self. Here we will tell you five simple steps to follow before buying term insurance, especially in times like we all are facing in the year 2020.
Step 1: Evaluating your Financial needs
Term insurance cover is meant to cover the financial needs of your family in your absence. You must include the following – Sources of income, dependent family members, existing debts and liabilities, expenses incurred to sustain their current lifestyle plus amount invested to fulfill financial goals like child’s education, future marriage, retirement, etc.
Step 2: Choosing the Right Term Insurance
Even if you are buying online or offline you will find four types of term insurance; basic term plan, term plans with monthly income, term plans with increasing monthly income and term plans with return on premium.
It will completely depend on your needs what kind of safety net you wish to create for your family. Seeing the situation like we all are facing in 2020, maximum term insurance cover should be availed with increasing monthly income, considering the inflation in mind. Do not choose the term insurance based on just being cheap on premium.
Step 3: Checking the claim settlement Ratio of Insurer
Choose the insurer with a decent claim settlement ratio and which is providing a maximum possible cover to you and your family. The claim settlement ratio is expressed in percentage and higher is always better.
Step 4: Calculating duration of cover with future inflation
Age and duration factors should be kept in mind when you purchase a term insurance plan. To avoid inflation biting your family’s lifestyle, you can opt for higher cover or ask the insurer to provide you with protection against future inflation.
Step 5: Do pick the riders to increase your cover
Several insurers offer the provision of attaching the riders to the term plans you are planning to buy. It increases the level of protection of your insurance cover. Riders like – critical illness, accident benefit rider can be picked with chosen term insurance policy.
(The author is Chief Product Officer, Bajaj Capital)