How to Purchase a Term Insurance Plan with the Lowest Premium?

Anyone who buys a term insurance/ term policy gets the benefit of having a life cover at a low rate as compared to other life insurance policies. This is the greatest benefit and also the reason behind its increasing popularity. But first, let us see what a term insurance is.

What is term insurance?

Term insurance can be considered the purest form of a life insurance policy. The mortality of a person is the only algorithm that works in term insurance. The entire premium paid by you covers the risk of your untimely demise. The insurance company disburses the benefits of the policy to your nominee.

The word “term” denotes the policy tenure. The duration of the term depends on your insurance needs. One of the key features of term insurance is its affordable premium. You may safely consider a term insurance plan to be a mandatory component of your investment portfolio.

However, before you actually embark upon settling down on a particular term insurance plan, you need to consider whether the policy matches your expectations in relation to the cover it offers. It is advisable that you use a term insurance plan calculator that is available online and on the websites of all life insurance companies to ascertain the policy you are choosing is the best suited to your needs.

In the following section, let us spend some time and ponder how to purchase a term insurance plan with the lowest premium. Some of the considerations to optimise the benefits of the term insurance plan vis a vis the premium are:

1.    Go for the right coverage

There are various types of life insurance policies available in the market, each having its own determinants to arrive at the premium. But, it is the term life plan that offers you a term cover of your choice backed by an affordable premium. Therefore, a term plan comes across as the most chosen life cover among investors.

2.    Encourage the online purchase of term life plans

There are different term insurance plans available online to choose from. The premium on online platforms is always lesser than offline options. The reason is that when you choose an online platform for buying the policy, the insurance company does not incur any management overheads. At the same time, there is no cost of intermediation. The portion of the savings is passed on to you through a lesser premium.

3.    Research before you buy

As an investor, you need to do thorough research on the different term insurance plans that are available in the market. A visit to an online platform will help you in studying what the best plan is for you. The plethora of options in front of you will enable you to optimise the premium versus cover benefits, with the help of a term insurance plan calculator.

4.    Options to pay premium

In a term insurance plan, the premium may be paid either in lump sum, or you may choose to pay the premium over a period of time, like five, seven or ten years. But it is the single premium term insurance policy, where the entire premium is paid up front, which is the cheapest. It also means life cover up to the sum assured taken in one go.

5.    Choose your insurer with care

There are many life insurance companies in India that sell their policies in the market. As a potential investor in a term life plan, you must take time and be careful while choosing your insurer. Every insurance company has their way of underwriting the risk. A comparative study of each of the insurance companies will guide you in choosing the one offering the best cover at the lowest premium.

A comparative study between the insurers will also help in guiding which of the policies offer the most benefits on the aspect of tax exemption.

While on the matter of choosing the insurance company, you also need to look at factors like the pedigree of the insurer, past performance of the promoter group, claim settlement ratio. After all, the objective of buying the term insurance plan is to ensure financial safety.

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