Life is uncertain, which means you need to prepare for eventualities well to protect yourself and your loved ones against financial turmoil. While there are certain things that one can predict, emergencies, by their very nature, arise unexpectedly. That is the reason it is a good idea to prepare ahead for all contingencies.
Term insurance is a financial product that can help you achieve that goal. It is the most affordable type of life insurance and often more preferred over traditional life insurance products.
To understand how to use a term plan calculator to compare policies, it is important to understand what term insurance actually means.
What is Term Insurance?
Term insurance is pure life insurance that an insurer offers to the policyholder to provide life cover. In exchange for this protection, you are required to pay a regular premium to the insurance provider. As the name suggests, this insurance is only valid for a certain period of time, also known as the policy term.
If the policyholder passes away during this period, the insurer will release the death benefit to the nominee of the insured person. However, it is important to note that this being a pure life insurance cover means that the insurer will not be liable to pay any benefit if the policyholder survives the policy term. That is why they are also incredibly affordable and can be easily evaluated with the help of a term plan calculator.
What is the Importance of Term Plan Comparison Tool?
India’s insurance industry has grown by leaps and bounds over the last few decades. As a result, many insurance providers have come up who promise to offer you the best term plans. As a result, there is a wide range of products available in the market, making it difficult to choose the right one. This is where the term life insurance calculator comes in.
When looking to buy a term plan, a potential investor can browse multiple websites to see the available options. A term plan calculator helps you assess these policies on the basis of coverage, premium, benefits, term duration, etc. That is the reason it becomes important to compare these plans so that you can choose the one that suits your individual needs.
A term plan calculator can also help you buy the right plan as it gives you a reasonable idea about the right coverage you are going to need to provide complete financial security to your loved ones.
Tips to Compare Term Insurance Plans
It would help if you considered some factors apart from the term plan calculator when using the comparison tool. Here are some parameters that will help you compare term policies the right way.
Decreasing vs Increasing Plans
A decreasing term plan assumes that your liabilities will reduce with age. Therefore, the need for insurance coverage will also be lower. Due to this reason, the sum assured will decrease in correspondence with age as per predetermined conditions. However, your premium will remain the same.
On the other hand, an increasing term plan is designed to account for growing liabilities as you age. Therefore, the sum assured will increase simultaneously year-on-year by a predetermined amount. In some cases, your premium may increase to pay for a higher sum assured.
You can use a term life insurance calculator to calculate the premium amount for both the policies to make an informed investment decision.
Single vs Joint Term Insurance
As the name suggests, a single term plan will only cover the policyholder or a single life.
However, joint insurance can be bought if you want to cover yourself and your partner in a single policy. If one of the two people passes during the tenure, the insurer will pay the death benefit as per the policy document. However, if both the policyholders pass away in an unfortunate event, their legal heirs will receive the death benefit.
Online vs Offline
This is one of the most important parameters when comparing life insurance plans. Online term plans can be purchased online. You can use online tools like a term plan calculator to compare policy premiums before buying. Online policies are also relatively cheaper than their offline variants.
Offline plans, on the other, require an agent’s intervention to be purchased.
These tools have been designed to help you make an informed investment decision. Moreover, using term plan calculators make it easier for you to compare policies in real-time and help you make an objective choice. However, be sure to read the fine print of all your insurance plans, such as waiting period in health insurance, inclusions/exclusions in a term plan, etc., before buying the policy.