Life Insurance: Here’s How to Decide the Policy Term?

• Your financial goal: You must take into the future goals and calculate the term period accordingly before you buy life insurance. If you are planning for retirement, then the term should be finalised to coincide with your retirement age. Similarly, if you are planning your child’s marriage or have decided to fund his higher education using the insurance maturity benefits, then it is essential for you to strategies your term period to match your goals. Moreover, you must also realise that the more time passes, the financial dependency of some of your family members, especially children, reduce as they are also in a position to earn. Therefore, all these factors must be diligently considered before purchasing the policy.
  
  
• Premiums payments: This is also directly related to your term period because the higher is the term period, the more will be the premium cost. So, you need to assess your income capacity and suitably select the term period that would serve your purpose of financial stability as well as sustain your present lifestyle. An ideal term period will make it quite easy for you to adjust your present income, expenses and savings to fund the premium payments.
  
  
• Need-based and not peer-based: It is often seen that insurance companies, in case of offline or online policy promotions, trying to make tall claims regarding some trends going on in the market. However, just like other financial instruments, even insurance does not have a one-size-fits-all rule, be it for the sum assured, policy type or the term. Therefore, one has to evaluate their personal goals and capacities before going ahead with a policy.
  
  
• Inflation Adjustment: Most insurance companies fix their sum assured plan based on multiple factors that are influencing the national economy. These factors are extrapolated and accordingly extended to come up with a certain sum that might be suitable for the policyholder. However, it is imperative on your part as well to calculate your savings by adjusting it with the inflation to ascertain if the sum assured in your case is best suited for you. If it’s not, you can opt for other insurance plans or even other forms of insurance policies.
  
  

How to Choose a Term Policy?

All the aforementioned tips would help you understand how to decide on your insurance policy’s term period. However, the financial market has numerous options, both in terms of companies and policies, which is why you also need to know how to choose a term policy that would benefit you the most. Here are some factors that would be useful.

• Premium cost - The cost of the premium is an important parameter for you to choose a term insurance policy. The premium is based on the term period as well as the sum assured after the maturity of the policy. 
  
  
• Insurance Riders - The option of insurance riders is also a crucial determinant that would drive your desire to purchase. Insurance riders are an amazing way to broaden the scope of your insurance coverage. So, the more options you have with insurance, the better it is for the policyholder.
  
  
• Flexible options - Most insurance policies are flexible and provide you with the option to adjust your premium and change the term duration. However, there are other flexibility options as well that need to be checked before purchasing an insurance policy.
  
  
• Claim Settlement ratio - This ratio helps you understand the credibility of the insurance company as it provides you with the ratio of the claims honoured with respect to the claims filed.
  
  

However, the best way to buy a term insurance policy is to purchase it online as you have the option to compare the various factors such as premium cost, claim settlement ratio, etc.

Visit PNB MetLife to know more about Term Insurance & Term Plan