Keywords – claim settlement ratio, term insurance

When it comes to protecting your family’s future, purchasing a term insurance policy is one of the best financial decisions you can make. However, with so many alternatives accessible in the Indian market, selecting the perfect plan might be difficult.

After all, you want to make sure your loved ones are financially secure when you’re not around. To make an informed decision, ask the appropriate questions and thoroughly assess the proposal. Here are the top questions to ask before buying a term insurance plan in India.

What is the insurer’s claim settlement ratio?

The claim settlement ratio (CSR) is a vital indicator of an insurer’s trustworthiness. It shows the percentage of claims that the company has settled out of the total claims received during a financial year. For example, a CSR of 97% means the company has settled 97 out of 100 claims, which reflects their reliability in fulfilling their promise.

You need a higher CSR so that your family has a higher chance of receiving the claim amount if you’re not around. For instance, the Insurance Regulatory and Development Authority of India (IRDAI) does publish CSR data which you need to verify the latest report before you decide.

What is the premium amount, and is it affordable in the long run?

It is the cost you pay for the term insurance. Yes, it is affordable if you use a calculator. By using an online calculator, you can compare premiums with insurers and find the best deal. Find out if the plan provides some flexibility in the payment of the premium (monthly, quarterly or annually) that matches your cash flow. The premium is important but do not compromise on sum assured and features for a lower premium.

What is the policy term and age limit?

The policy term is the length of time the insurer provides coverage. For your policy term, it is important that you match that with your financial obligations.

· If you have a home loan, the term must be equal to the loan tenure.

· The period should last till young children become financially independent

You can check the age restriction for coverage. Those aged 75 to 85 are covered by most policies. By choosing a policy term that is longer than your working years you are ensuring that your family will be financially secure when you retire.

Does the policy offer flexibility in premium payments?

The premium payment options vary from plan to plan. Common options include:

• Regular Pay: Throughout the policy term.

• Limited Pay: Get coverage for the full term but pay for a shorter duration.

• Single Pay: You pay a lump sum premium upfront. Premium management can become easier with flexibility in payment modes (monthly, quarterly, half year or yearly). Select an option that will fit your finances.

Is there an option for increasing coverage over time?

Many term plans now offer a feature called “life stage benefit” to increase your coverage during key milestones, such as:

• Getting married.

• Having children.

• Buying a house.

This feature guarantees that your insurance adjusts to your changing obligations without requiring a new plan. Enquire about the terms and circumstances of increasing coverage and whether extra premiums are necessary.

Are there any exclusions in the policy?

Exclusions are specific scenarios under which the insurer will not pay the claim. Common exclusions include:

• Death due to suicide within the first year of the policy.
• Death resulting from hazardous activities like adventure sports.
• Death caused by pre-existing medical conditions if not disclosed at the time of purchase.
  Reading the policy document carefully ensures that you are fully aware of such exclusions. This avoids unpleasant surprises during claim settlement.

What is the tax benefit of this plan?

Term insurance plans in India offer dual tax benefits:

• Section 80C: One can deduct up to ₹1.5 lakh per year on premiums paid.

• Section 10(10D): If the premium to sum assured is at least 1:10, the claim payout is also tax-free.

Knowing these helps you to plan your tax from the standpoint of your financial protection goals. Make sure you meet the tax provisions to make the most savings.

Is the insurance company customer-friendly?

Customer service is key, especially so when your family needs to file a claim. Read customer reviews, check grievance resolution timelines and see the digital capabilities of the insurer to research their reputation for responsiveness. Search for features such as online claim tracking and 24/7 support. If a company shows its priorities in customer satisfaction, the entire process will be smooth and stress-free.

Ending note

A term insurance plan is a crucial financial decision. The ten questions you ask when you create a plan like this make sure the plan fits your family’s needs, is within your budget, and offers good coverage.

However, remember that there is more to a term insurance policy than cost; it’s also about trust, flexibility, and benefits. Don’t rush, see various plans and select the one that will give you and your loved one peace of mind. Term insurance is more than a financial product; it’s a promise to protect your family’s future.