Steps to choose best term insurance.
Term insurance is one of the life insurance policy where you get coverage (money) for deaths in particular time "term". You can get up to 25x of your income, while claiming.
Who needs a Term insurance?
- 1. A family member who makes the family's income.
- 2. Who doesn't have any sufficient money or investments.
- 3. Everyone with debts, such as a loan.
- 4. Important expenses, such as children's education, weddings, and so on...
What is the right time to get a term insurance?
Try to purchase a term insurance as early as possible, when you are healthy. Because the premium is low at early age. As your age increases, the premium will be higher.
Term insurance vs Whole Life Insurance
| Term Insurance | Whole life Insurance |
|---|---|
| Insurance is valid only for limited time/term/Age. | Insurance is valid until death. |
| Premium is comparatively less. | Premium is high. |
| Premature death will be the only thing that is considered. | Premature death and life until the duration of the policy's term are both covered. |
Steps to choose best term insurance companies:
1. Claim Settlement Ratio (CSR).
Example: If the insurance company company received 100 claims, & passed only 98 claims. Then the Claim Settlement Ratio will be 98%. The more the percentage, the better the company is.
2. Amount Settlement Ratio.
Example: From the previous example, if the total amount claimed is 10Cr, & if it passes only 9Cr. Then the Amount Settlement Ratio will be 90%. The more the percentage, the better the company is. Amount Settlement Ratio is more important than Claim Settlement Ratio (ASR > CSR).
3. Claim Rejection Ratio.
The percentage of claims rejected. The lesser the rejections, the better the company is. Choose the insurance companies with less then 1%.
4. Assets Under Management.
The amount of money that an insurance company manages. The more the money that a company manages, the more the company capable to pass the claims.
5. Solvency Ratio.
The x times of liabilities in terms of assets that a company has. All the insurance companies need to maintain minimum of 1.5x. The more the solvency ratio, the better the company.
Riders to choose.
Rider 1: Critical Illness: Choose for future critical illnesses.
Rider 2: Accidental Disability: Choose for future permanent accidental disabilities.
*Note: Always ask for the terms & conditions.*
*Always go for online method to purchase term insurance, because there is no person between you and company. And it is cheaper than offline method.*
Reasons for rejections of claims:
- Improper Disclosures. Go for the right answers while questioning.
- Inaccurate Information/Documents. Provide the right information/documents.
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