7 things to compare before buying a term insurance plan

Picture this: You're on the hunt for a new phone. Unless you're devoted to a specific brand, what do you do? You size up different models within your budget, narrow down your favourites, compare their features and finally settle on your perfect tech companion. Sounds logical, right? Well, guess what? When it comes to buying life insurance, you need to be just as thorough in your understanding since it is a more complex product.

Since term insurance comparison is a challenging task, here are seven key factors you need to consider when choosing a life insurance policy.

1. Life Cover Amount: Think of your life insurance policy as a financial safety net for your family. If you were to pass away, the sum assured by your policy should be enough to replace your income and cover any outstanding debts or daily expenses your family might face. Many people choose ₹1 Crore term insurance as a standard choice. However, the required life cover varies from person to person. To know how much life cover you need, check our term insurance calculator.

2. Premium Rates and Payment Options: Affordability is key. You need a plan with a premium that will not stretch your budget. You also want flexible payment options. Is the premium affordable? How often will you have to pay it? Shortlist the policies that offer the best balance for your financial situation.

3. Add-on Riders: Think of riders as extra layers of security for unforeseen circumstances. They can provide coverage for critical illnesses, accidental death and permanent disability among other things. They are like an upgrade to your term insurance plan for a small additional cost. For example, an accidental death benefit rider would provide an additional pay-out if you were to die in an accident. Make sure to compare the riders offered by different plans and pick what best fits your needs.

4. Maximum Tenure: A term insurance policy should ideally cover you until you retire. By then, you would hopefully have saved for a nice retirement and finished with responsibilities like children's education, etc. But some policies provide coverage till 90 or even for your entire lifetime. So, weigh the policy tenure and consider your end goal before deciding.

5. Reputation of the Insurance Company: You want to choose a reliable insurer with a high claim settlement ratio because it indicates its commitment to settling claims. Bandhan Life‘s Claim Settlement Ratio (CSR) of 99.37% is among the highest in the industry.

6. Ease of Buying: Look for an insurance company that offers an easy and hassle-free online buying process. Bandhan Life’s iTerm Prime, offers a simplified buying journey with zero documentation and an excellent customer service team at your disposal.

7. Customization: Some policies can be tailored to your specific circumstances like term length, coverage amount and beneficiaries.

Just like any long-term commitment, the choice of a life insurance policy deserves careful thought and comparison. By considering these factors, you're sure to make an informed decision that best suits your needs, offering not just financial protection, but peace of mind for you and your loved ones.

Also read: Thumb-rules of personal finance.