Buying term insurance? Know these 3 key points now—or risk costly regret later

Opting for a term plan is one of the most prudent decisions you can make to safeguard your family. But how do you choose the right policy? How much coverage should you opt for? And what are the common mistakes that could lead an insurance company to reject your claim? Secure your family's future with these simple tips from experts.

Term insurance acts as a protective shield that provides financial support to a policyholder's family in the event of their death. Simply put, if you are no longer around, the insurance company will pay a predetermined sum to your family, ensuring that their lives continue without facing any financial hardship. Expert Varun Agarwal advises that when purchasing a policy, you must check the company's "Claim Settlement Ratio," which indicates how many claims the company has successfully paid out in the past.

How Much Insurance Coverage Do You Need, and When Should You Buy It?

Your insurance coverage amount should be at least 10 to 15 times your annual income. For instance, if you earn ₹5 lakhs per year, you should opt for a minimum coverage of ₹50 to ₹75 lakhs. Most importantly, it is advisable to purchase term insurance early—ideally between the ages of 25 and 30. The younger you are when you buy it, the lower your premium will be, and that lower rate will remain fixed for the entire duration of the policy. Purchasing a policy online is typically 7% to 11% cheaper than buying it offline.

Be Sure to Add These Essential Riders

A basic life cover alone is not sufficient. Make sure to include these three additional features (riders) in your policy:
Critical Illness Cover: Provides a lump sum amount to cover treatment costs in the event of a serious illness, such as cancer or a heart attack.
Accident Cover: Provides an additional payout to your family in the unfortunate event of death caused by an accident.
Waiver of Premium: If you are unable to pay your premiums due to an illness or physical disability, future premium installments are waived, and your insurance coverage remains active.

Why Do Claims Get Rejected, and What Are the Tax Benefits?

People often conceal illnesses or smoking habits, which subsequently leads to the insurance company refusing to settle claims. Disclose every detail truthfully to ensure that your family faces no difficulties in receiving the payout. In terms of benefits, the premiums you pay are eligible for income tax exemptions, and the entire sum received by your family is also tax-free.