Time for your first Term Plan

Providing financial protection to your family often forms the basis and first step of financial planning. It is in this circumstance that a simple form of insurance called a Term Plan becomes very crucial. A term plan is an insurance tool that offers financial protection in the form of a sum assured to your family members if something unexpected happens. 

Vineet Arora MD & CEO, Aegon Life Insurance. 


With youth comes a sense of carefree bliss accompanied by a short-termoutlook towards life. However, as we age and progress in life, we begin to absorb the significance of planning for the long-term, for a time when we have long gone. 
 

Providing financial protection to your family often forms the basis and first step of financial planning. It is in this circumstance that a simple form of insurance called a Term Plan becomes very crucial. A term plan is an insurance tool that offers financial protection in the form of a sum assured to your family members if something unexpected happens. 

 

Most term plans offer a variety of solutions tailored to fit a variety of situations. Here are a few steps that one needs to bear in mind while choosing their first and accurate term plan. 
 

 Buy the simplest form of plan without too many complexities 
A term plan comes into various flavours now a days. The most basic cover is the one which pays you a lump sum on death. Opt for that if you want to avoid too many nuances. 

 

Mention if you are smoker/alcoholic
One of the worst things you can do while purchasing any life insurance plan is to hide the fact that you are a smoker or consume alcohol. Please don’t hide it. Your premium calculation happens based on these critical information and if you hide these facts, then you are actually breaching the contract with the company and almost always your claim will be rejected at the end. Please bear in mind, occasional smoking does not make you a non-smoker.

 

Don’t take small insurance cover (like Rs.10-20 lacs)
It has been observed that those who have term plan try to cut the corners and eventually purchase aterm insurance cover with a lesser premium. The average sum assured per India is in the range of Rs 90,000 to 1 lac only. Indians on an average are highly uninsured. 
Ideally, for a basics, it should be 10 to 12 times your annual income

 

Don’t overanalyse and procrastinate your decision
One of the biggest drivers of potential buyers is that they want to buy the best term insurance policy and don’t want to make an uninformed decision. They are very well aware that they need a life cover, do the basic research of best plans to buy, compare the term insurance plans offered by various organizations, but then end up overanalysing the policy, its features, the premium comparison etc. Eventually, they don’t take any decision because of the muddle. They post pone the decision and sometimes end up skipping it entirely. 

 

Communicate to your family that you bought a term plan
You should inform your family about the purchase of the term plan immediately. Also, provide them the policy papers and the contact number of the insurer. You can also write down the claim process on paper and keep that at a safe location and share with family. it’s not an easy conversation to do even though it’s a logical thing to do. But at least communicate to your family about the important things they should be aware of in your absence.

 


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