The Best Term Insurance Plan for 1 Crore: Is it Better To Buy a Term Plan With High Coverage?
The best term insurance plan for 1 Crore provides the policyholder an extensive life cover to the nominee or beneficiary in the event of the insured’s death. The comprehensive cover is deemed adequate to help individuals ensure that their loved ones will lead a life free of financial liability and will be able to repay ongoing debt, cover daily living expenses, and achieve major life milestones like funding children’s higher education or planning marriage, without any hassles even when the insured is long gone. The ideal term life insurance plan has a high sum assured to help cover the insured’s beneficiary’s financial needs. The thumb rule is the sum assured should be at least 10-15 times the annual income of the insured. However, they should also account for their living expenses, liabilities, and inflation rate to make an accurate estimate. Keeping this in mind, an individual can easily determine whether a 1 crore term plan is adequate for them or not. They can also use a term insurance calculator to ascertain the required sum assured and premium charge with much accuracy.
That said, let’s discuss more about term insurance policy for 1 crore and how is it beneficial.
Factors to Consider Before Buying the 1 Crore Term Insurance
Prospective insurance buyers should consider these factors before buying the best term insurance plan for 1 crore –
- Premium rate: After reviewing the term insurance policy’s features, all inclusions, and exclusions, considering the premium is crucial to term insurance plans. Note that the insurance plan’s premium may vary based on the insurance provider. Individuals can use a term insurance premium calculator online to compare the term plan premiums extended by different insurers. The tool will help find a suitable plan that would help them meet their family’s financial requirements. However, one cannot use the insurance premium tool to compute the returns or obligations of other financial products or investment instruments. For instance, using the term insurance premium calculator one cannot determine the SIP returns of their mutual fund investment. To compute the estimated returns, individuals would need to use a SIP calculator and specific calculators for specific financial instruments to obtain accurate results.
- Claim settlement ratio: CSR is basically the percentage of claims the insurer has settled in a given year compared to the number of claims they received in the same period. Usually, a ratio over 90% indicates that the insurance company has settled almost all claims they received in the year and it is a smart choice to buy insurance term plans from them. Therefore, it is advised to choose an insurance provider with a high CSR so that nominees or beneficiaries of the plan can settle the claim on time.
- Policy term: The insurance policy term is the duration during which its coverage is valid. Hence, it is vital to choose a policy term that will cover the insured until their financial obligations are sorted or the dependents become independent of some sort.
- Solvency ratio: When getting a term insurance plan for 1 Crore, it’s important to pick an insurance provider with a good reputation and a high solvency ratio. This means the insurance provider is financially sound with enough assets to settle claims. Individuals can find an insurer’s current solvency ratio on their official website or annual report.
- Exclusions: Before buying the best term insurance plan for 1 Crore, individuals must read the policy document to understand the cover and identify the exclusions. Exclusions are just situations where the insurance provider will not settle the claims. Some common insurance exclusions include death by suicide, death because of pre-existing medical reasons, and death during war.
- Riders: Individuals can add riders or add-ons to their current term insurance plan to customize their coverage. Notably, there are many riders available like – waiver of premium, accidental death cover, permanent disability cover, or critical illness cover. Selecting the most required add-ons from the list of available riders for a nominal fee can enhance one’s existing coverage significantly and help them increase the financial safety net for their family.
While the benefits are evident, it is important to think about whether a term plan for Rs. 1 crore is suitable for all. If yes, then why should one actually purchase it.
Who Should Buy 1 Crore Term Insurance Policy?
These individuals should consider getting a comprehensive term insurance plan for 1 crore –
If you are young:
Young individuals who are in their 20s and early 30s, i.e., beginners in their career should consider getting a 1 crore term insurance policy because they are more likely to get a high sum assured at low premiums than others.
If you are the only earner:
Sole breadwinners will benefit from buying a term insurance plan for 1 crore to extend comprehensive financial security for their family even long after the insured’s absence.
If you have many dependents:
Those with many dependents like young siblings, elderly parents, kids, spouses, or in-laws, should get a 1 crore term insurance policy to ensure their financial well-being in their absence.
If you have ongoing loans:
Individuals with debt like student loans or mortgages, may consider getting a 1 crore term insurance to help their dependents pay off the existing debt or future obligations if they pass away.
This way, individuals can make the most of the best term insurance plan for 1 crore and ensure the financial safety and independence of their family members long after they are gone. Individuals may also consider increasing their coverage later if they feel the need for the same and ensure wholesome coverage for their families. However, individuals should note that they must find details about the insurance provider’s market reputation, claim settlement record, and track of resolving customer queries to ensure the beneficiaries have a hassle-free claim settlement experience in times of distress and access the sum assured without going through a lengthy waiting period.