Sep 09, 2022
Hear 5 tips for millennials to choose the right term insurance plan
Millennials, who make up a third of India’s population and 46% of its current workforce, are more confident when it comes to finances and using digital payment methods than any other generation. However, some financial habits of millennials tend to worry older generations. These habits include spending more on credit, using credit cards extensively, experimenting with investment products, using multiple payment methods, splurging on passions and luxuries, etc., which prevent them from maintaining their lifestyle. life due to the high cost of living. Therefore, inculcating good financial habits is essential to secure your financial future.
To ensure your family’s financial stability even when you’re away, it’s crucial to protect yourself with the right term life insurance plan. It provides financial security for your loved ones so they can continue living the same lifestyle without any compromise due to financial instability caused by the loss of a winning member.
Term insurance is basic life insurance that everyone should have because it provides financial protection for your dependents at an affordable premium. This is a type of life insurance that provides coverage for a certain period called a term. In the event of the unfortunate death of the insured, term life insurance provides financial protection to the family of the insured. A policyholder is required to pay a premium for a chosen duration. However, failure to do so will result in forfeiture of the policy.
The three main factors affecting the premium are the age of the insured, the sum insured and the duration of the policy. The health and medical history of the policyholder are also taken into account when calculating the premium. The sum assured is offered to the applicant in the form of a death benefit in the event of the unfortunate death of the insured during the term of the policy. You should know that the insured is not the beneficiary in this type of insurance because the sum insured is given to the agent in the event of the death of the insured. If the policyholder survives the term of the policy, he has the option of renewing the policy with a new term, but the premium is calculated taking into account the age and state of health at the time of renewal . Traditionally, term insurance does not provide survivorship benefits. But, nowadays, many insurance companies offer many benefits in the form of add-ons that can be purchased by paying an additional premium.
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1. Buy early:
Buying a life insurance policy early in life, when you’re young and healthy, is the best way to get maximum life coverage at a lower premium. The premium remains the same for the duration of the contract. But as you age, you are more susceptible to illnesses and other ailments, which is why the risk of life insurance companies paying out the sum insured also increases. This ultimately results in an increased premium with each passing year. Therefore, it is advisable to buy a term plan as soon as you start making money.
2. Calculate the right life insurance coverage:
Many young people opt for life insurance based on the suggestions of their insurance agent. However, this cover may not be suitable and sufficient for their needs. Therefore, before purchasing term insurance, it is crucial to assess your life insurance needs. Your insurance needs vary depending on your age, income and lifestyle. For example, a married person with children will need more life insurance coverage than an unmarried person. The required life insurance coverage can be calculated using four different methods viz. Value of human life, income replacement value, expense replacement and the insurer’s rule of thumb.
3. Consider critical illness coverage:
With a drastic change in lifestyle from previous generations, millennials are prone to diseases like stroke, kidney failure, cancer and many more. These serious conditions are caused by a host of other conditions such as diabetes, obesity, hypertension, stress, poor eating habits, etc. Serious illnesses can arise unexpectedly and affect the patient and family emotionally and financially. Critical illness coverage gives you financial help in these difficult times with affordable premiums. Therefore, it makes sense to cover yourself from an early age with critical illness insurance.
4. Choose the appropriate riders and add-ons:
Life insurance riders and top-ups are the added benefits you can get by paying a slightly higher premium. They allow you to customize your basic term plan by adding certain riders as needed and provide comprehensive coverage for specific areas that you find high risk given your lifestyle. The policy premium only increases with the riders you choose to pay. However, it is necessary to analyze your lifestyle, understand the potential risk, and then choose the appropriate jumpers and supplements. While buying a life insurance policy loaded with multiple riders and add-ons can be convenient, it can unnecessarily increase the premium for extra features you may never need. Some of the most popular riders are Accidental Death Benefit Rider, Waiver of Premium Rider, Accidental Disability Rider, Critical Illness Rider, and Family Income Benefit Rider.
5. Compare different plans:
Buying a life insurance plan based on the recommendation of social media influencers, friends, family, colleagues, agents, etc., is the biggest mistake many young people make insured. As stated earlier, it is important to analyze your needs and choose the right plan that fits your needs. For example, a young couple may need a joint term insurance plan or an additional term insurance plan. Apart from this, many people are unfamiliar with insurance terminologies and often purchase a life insurance policy without fully understanding the features and conditions of the policy. If you don’t make an informed decision when purchasing a life insurance policy, you could end up with a policy that’s not suitable for your needs and pay a higher premium. Therefore, it is advisable to do your research by comparing policy features and benefits, premiums, terms and conditions, customer service, claims settlement process, claims settlement ratio, etc., before choosing a temporary plan that is best for you. Many financial websites allow you to compare various life insurance policies from different insurance companies. You can also read customer reviews to gain insight into the life insurance company and its policy. This can help you choose the best term life insurance policy for you.
If you are confused between buying a term life insurance and an investment insurance plan, it is advisable to buy a term life insurance plan instead of investing in an insurance plan. investment. There are many other investment options that can meet your long-term financial goals.
Buying a life insurance policy for the first time can be overwhelming. However, the time you spend understanding your needs and doing extensive research to find the right insurer and the right policy is well worth it. Buying a term plan online is more convenient and affordable than buying it offline. Also, make sure you carefully read and understand all features, benefits, terms and conditions, list of exclusions and inclusions, policy exemptions, etc., to avoid any disappointment or litigation at coming. Click here to download a free copy of Your Definitive Guide to Buying Life Insurance.