Term insurance plans were introduced with a very basic structure – the plan will offer a sum assured upon the death of the policyholder, will provide coverage till 65 years and premiums can be paid in only the annual mode. However, it started getting more complex, when more and more insurers started offering online term life insurance plans.
Today there are – limited pay plans, increasing cover plans, staggered payout plans, the return of premium plans and dozens of combinations. While this profusion of choices is good, it is also becoming a problem for most of us to decide which plan to buy.
5 to Know Before Buying Life Insurance Plan
Calculate how much term insurance coverage you need:
Your term life insurance coverage should broadly assess how much money your family would need if you were to meet with an untimely death. The best way to do this is to grab a piece of paper and start calculating the following.
- One, estimate your dependent family’s monthly expenses and multiply it with 150. The multiple of 150 factors in future inflation.
- Two, add your liabilities on the account of home loan, personal loan, credit card bills.
- Three, deduct all the liquid assets you already have in the form of FDs, stocks or mutual funds.
- Four, add your expenses planned on the account of important life goals that are likely to happen in the next 15 years. Like your children’s higher studies or their marriage.
- Five, add the retirement corpus that you would want to leave for your spouse on his or her retirement.
- Considering all these factors will help you decide how much term insurance cover you would need.
|Total Insurance Cover That You Would Need|
|Monthly × 150 times|
|Liabilities (+)||Home Loan, Personal loan, Credit Card|
|Liquid Assets (-)||Fixed Deposits, Stocks and Mutual|
|Future Expenses (+)||Children’s education, Children’s Marriage|
|Retirement Corpus for Spouse (+)||Retirement Corpus|
Determine the tenure of your Insurance plan:
Once you know how much coverage you need, it is important to know till what age you would need it for. The tenure should not be too little as the policy might lapse before your financial obligations are completed. At the same time, the tenure should not be too long because the premium charged would be too high on the account of the higher tenure.
The right way to estimate the tenure of your term life insurance plan is to determine by what year your liquid net worth, i.e. the total investment you have in mutual funds, provident fund, stock, etc after subtracting your liabilities, will be more than your term life insurance cover that we have calculated in the earlier section.
The age at which these two numbers coincide should be the age till which you need coverage. Post that, your assets will be enough to take care of your family in your absence.
Target the highest Peace-of-Mind per rupee premium:
Here, we use the term Peace-of-Mind rather than coverage per rupee of premium because consumers often value some key intangibles while making a decision.
For choosing a term plan, these factors could be the stability of the insurance provider or its reputation in the eyes of the policyholder. Term life insurance is a long-term contract, often running for 30 to 50 years. Hence, it is important for you to be happy with your decision about the insurance plan you have picked, which would be a combination of the premium you pay and your perception about your insurance provider.
Useful Tips – Life Insurance Plan
For most insurance providers who sell their term, life insurance policies on online platforms like ETMONEY are cheaper than the policies they sell offline at branches or through agents. So it is always beneficial to buy term insurance plans online as they give you a premium advantage.
Choose your add-ons wisely in 2020:
Term life insurance plans offer riders at a reasonable cost which should be certainly considered by you even if they might not fit your requirement.
There are four major riders that are available:
- Additional cover for death due to accident: In case you die due to an accident during the policy tenure, this amount would be paid to you in addition to the basic sum assured.
- Cover for critical illness: A lump sum amount is paid to the policyholder on being diagnosed with one of the diseases which has been mentioned as a critical illness in the policy by the insurer.
- Waiver of premium on disability: If the policyholder becomes permanently disabled during the policy tenure, the future premiums for the policy would be waived off.
- Waiver of premium on critical illness: If the policyholder is diagnosed with one of the critical illnesses mentioned in the policy during the policy tenure, the future premiums for the policy would be waived off.
Of the four riders, two riders, i.e. waiver of premium on disability and waiver of premium on critical illness, come at a low premium. The rider for critical illness cover is the most expensive. Hence, you have to run some research to find out if the additional benefits match up with the premium charged. And read the fine print of all the add-ons as they tend to be different for different insurance companies.
Broadly look at the claim settlement ratio:
The claim settlement ratio usually attracts a lot of consumer attention. It indicates the efficiency at which the policies are settled by the insurance company. So when you see the 95 percent in the claim-settlement ratio column, it means 95 out of the 100 claims reported to the insurance company was settled.
However a word of caution here. The claim settlement ratio is merely an indication. If the claim settlement ratio of a company is more than 95 percent, then the company has been very efficient about settling claims. You really don’t need to go much deeper into it to see who has 99, or who has a 98.5 percent ratio. You should consider the claim settlement ratio as a filter rather than a key decision-making criterion.
One More Thought:
Term life insurance is a long term contract between you and your insurer, and it will benefit your family when you are not there. It is in your best interest to choose the right plan for your family by considering all the five factors discussed in the article.
Also, check the term insurance section in the ETMONEY app to buy a best term life plan in a paperless manner.
After reading above things now you will wise life insurance plan taken, in next step we talked about how you can low cost health insurance in 2020 so stay tuned.
Get Free or Low-Cost Health Insurance in 2020
If you’re new to health insurance in the United States, you’ll find it’s expensive. But the cost isn’t the only problem for beginners trying to get health insurance. It’s also a complex system with multiple entry points. Since you can potentially get health insurance from many different sources, such as the government, from your job or university, or from a private insurance company, it’s not always clear where you should start looking when shopping for low-cost health insurance.
You may want to consult the HHS Health Resources Services Administration (HRSA) directory of health centers at http://findahealthcenter.hrsa.gov/ – these health centers provide care on a sliding fee scale so it is affordable for anyone. You can receive care even if you are uninsured or cannot pay. Search the directory by zip code to find the centers nearest you.
The Hill-Burton program, while limited in scope, provides funds to hospitals and other health care facilities in exchange for their provision of a specified amount of free or reduced-cost health care to low-income people. To find out if you qualify for Hill-Burton assistance you must apply at the admissions or business office at a Hill-Burton facility. Also, see the directory of Hill-Burton facilities (HRSA).
You can locate affordable health insurance at the HealthCare.gov Marketplace for coverage.
Before exploring your options for free or low-cost health insurance, understand one thing: health insurance is never really free and is rarely truly low-cost. Health insurance that’s free or low-cost to you means one of two things:
someone is subsidizing the monthly premiums so that you’re not paying the full cost yourself, or
the benefits have been reduced so the coverage you’re buying isn’t comprehensive health insurance; it’s less robust coverage.
Next, you’ll find several options for free or low-cost health insurance, along with a description of who is eligible, how to apply, and what to expect.
Medicaid – Best Life Insurance:
Medicaid is a social-welfare program that provides comprehensive government-based health insurance to low-income people. Medicaid is free health insurance for those who qualify. In most cases, there are no monthly premiums, and there is no or minimal cost-sharing in the form of deductibles or copayments.
Medicaid works slightly differently in each state, but to be eligible, you must meet low-income guidelines. In many states, you’ll qualify for Medicaid if your income is 138% below the federal poverty level.1 However, some states have stricter eligibility criteria. In those states, you must meet low-income guidelines and also be a member of a medically vulnerable group, such as a pregnant woman, an elderly person, blind, disabled, or a child.
Medicaid may be available to immigrants who have been legally residing in the United States for five years or more if they meet eligibility requirements.2 Medicaid isn’t usually available to undocumented immigrants, although there may be exceptions such as short-term limited Medicaid coverage in emergency situations, and emergency coverage for pregnant women.
Short-Term Health Insurance
Short-term health insurance frequently costs less than But, beware of Health Insurance Marketplace Scams.
Enrollment assisters will NOT ask for money.
Do not trust people you did not contact who request personal information. They may be trying to steal your identity. No one from the government will call or email you to sell you an insurance plan or ask for personal identifying information. Be careful when giving you personal information, such as credit card, banking, or Social Security numbers.
Always look for official government seals, logos, or website addresses on websites selling health insurance.
comprehensive health insurance. For this reason, it’s an attractive option for people looking for temporary coverage. Short-term plans are available for up to 12 months of coverage. However, as of 2018, renewal options are available for individuals that would like to extend short-term health insurance coverage beyond 12 months and up to 36 months.4
Although short-term health insurance can be a low-cost health insurance option, it isn’t right for everyone. For one thing, it doesn’t satisfy the Affordable Care Act’s requirement to have comprehensive health insurance, so it may not help you avoid the tax penalty for being uninsured.5
Additionally, short-term health insurance plans don’t have to follow all of the Affordable Care Act’s rules. For example, a short-term health insurance policy can place a cap on benefits, limiting the insurer’s potential losses if you become seriously (and expensively) ill while you’re covered. Short-term health insurance doesn’t have to cover all of the essential health benefits. For example, it might not cover maternity care or birth control.
You can even be turned down for coverage entirely if the insurer feels you’re too big of a risk to insure. However, if you’re young, healthy, and pose little risk of expensive claims for the insurer, short-term health insurance can be a surprisingly low-cost health insurance option.
You can buy a short-term health insurance policy directly from a health insurance company, use your own insurance agent, find a health insurance agent or broker at the National Association of Health Underwriters website,6, or use a non-governmental private online exchange such as ehealthinsurance.com. However, short-term health insurance is not sold on the Affordable Care Act health insurance exchanges such as HealthCare.gov.
In this article, you get knowledge about which things you have to take in mind before buying any kind of Life insurance plan, and we also talked about how you can get low-cost insurance for yourself, if you still have question feel free to ask in the comment box.