How to Evaluate a Term Insurance Quote

Investing in a term insurance plan right from an early age is necessary, as it ensures that you have a solid investment portfolio. If you wish to have a clear idea about the term plan meaning, keep reading further.

A term plan is a basic version of a life insurance policy, as it only provides life coverage to the policyholder for a specific period. Here, the insurer will pay the death benefit to the policyholder’s nominees if he or she dies within the policy duration. A term plan does not have any investment component. So, if the policyholder lives through the policy tenure, he or she does not get any survival benefit, unless he or she had purchased a term plan with the return of premium option. A term plan can act as an income replacement tool for the deceased policyholder’s loved ones. It can help them meet the household expenses and fulfill their financial aspirations.

As you are spoilt for choices when buying term insurance in India, it becomes necessary to compare the prices, features, and benefits of various policies before investing in one. Here are some aspects that you should consider while evaluating a term insurance quote:

  • Age

The premium of term plans is significantly lower for younger people compared to older policyholders. It is because, in the case of young individuals, the risk of mortality and developing life-threatening diseases is quite low. So, the premium will increase if you buy a term plan at an older age. A core plus point of a term plan is that the premium is quite cost-effective in comparison to any other type of life insurance policy. So, this cost will not hurt your pocket.

  • Premium

When you compare the premium offered by offline term plans viz-a-viz online policies, you will find out that the latter mode has a much cheaper rate. It is because the insurer does not take the agent’s commission into account and gives that benefit to you. Factors like age, the sum assured, tenure, gender, lifestyle habits, and medical condition influence a term plan’s premium. So, the premium for a person who smokes or has pre-existing medical conditions will be more compared to a non-smoker and a physically fit policyholder. You can determine the amount you need to pay for your desired sum assured with the help of a term insurance calculator.

  • Riders

Riders enhance the coverage of a term plan. However, you need to purchase them separately at an extra cost. Riders can increase the term plan’s quote, but they are worth the price, as they offer many benefits. You can opt for riders like accidental death benefit rider, critical illness rider, and accidental disability rider, among others, as per your requirements.

  • Tenure

The quote of a term plan also depends on its duration. Factors like age, current income, expected income, retirement age, liabilities, and financial responsibilities influence the policy period.

  • Medical test

Many insurance companies will ask you to undergo a medical examination before issuing your term plan. It is advisable to opt for it, as your current health condition can have a huge influence on the quote. Also, be truthful with the insurer and do share with them about your pre-existing medical conditions, if any. It is because the insurer can reject your nominees’ claim if they find out that the untoward incident happened due to a pre-existing health problem. If the medical test indicates that you are healthy, and have no medical issues, your premium will be nominal and vice-versa.

  • Comparison of quotes

Before buying a term plan, ensure that you analyze quotes from various insurers. Use a term insurance calculator to review the estimated costs of different plans and opt for the one that meets your needs.

A term plan can prove to be a valuable investment for your loved ones when you are not there to take care of them. So, do not take it lightly. Do adequate research and purchase a plan with a substantial sum assured so that your family can live a financially independent life.