How to Pick the Right Term and Health Insurance?

 

As you may know, medical treatments nowadays can put a considerable financial burden on your pocket, which makes planning for any unanticipated eventuality ahead of time mandatory. Health insurance is a policy that provides financial assistance to people who are diagnosed with a medical condition according to the terms and conditions of the policy. A health insurance policy covers all aspects of treatment, such as diagnostic tests, hospitalization, and medications. Another important policy to keep with you is term life insurance which is well-known for financially protecting your family in case you pass away, unfortunately. It pays out a lump sum to your family up to the sum assured you chose when you purchased the policy. However, choosing the perfect plan for your loved ones’ financial security can be difficult with so many options available around us. Before purchasing a term insurance and health insurance plan in India, you must examine a few factors to guarantee you choose the correct plan for your needs. 

Check the claim settlement ratio: When purchasing a term insurance policy, you want to ensure whether the insurer pays out your claims promptly or not. To do so, look at the claim settlement ratio averaged over three years and the percentage of claims paid out in under 30 days. If both numbers exceed 97%, you have a winner on your hands. You may obtain this information in IRDAI’s yearly reports or speak with our experts.

Check the volume of complaints: If there are more than 20 complaints per 10,000 claims registered, it is time to reevaluate your insurer. These numbers may be found in public disclosures since insurance companies are required to declare them on their website. 

You need a high amount settlement ratio too: In order to improve the claim settlement ratio, some insurers pay out smaller claims while deciding to not pay out a few higher-value claims. To determine this, look at the total amount settled as a percentage of the total value claimed, which should be greater than 90%. You can find this information in the IRDAI’s annual reports or speak with one of our advisors.

Critical Illness Benefit: If you are diagnosed with a debilitating disease, you may be at risk of losing your job, and your family will have to make do without your income. However, if you choose the critical illness benefit, the term insurance policy will make a payout to help you deal with the crisis. Keep in mind that not all critical illness benefits are the same, so you must do some research.

Survival Period: Payouts for critical illnesses normally aren’t provided immediately. Instead, most health insurance plans require you to survive for a specific length before they issue the payment. So, make sure to get health insurance that pays out the sum the instant the diagnosis is confirmed.

Accelerated Payout: Some policies will pay out the critical illness (CI) benefit from the total term cover available (accelerated payout), while also giving you the option to add it to the total term cover available. Ideally, you’d like the insurance to pay out the critical illness sum on top of the term cover offered.

Waiting Periods: Most health insurance have a provision for waiting time before making the Critical Illness Benefit available to the policyholder. You want to ensure that the waiting period is less than six months before choosing the term life insurance or health insurance. 

Accidental Death Benefit: Some policies provide the option of adding extra protection for accidental death, in which case you can choose your death and accidental death cover separately. The experts recommend that customers choose a comprehensive cover without worrying about the specifics of death. 

Terminal Illness Benefit: Some policies will pay out the entire insurance amount if you are diagnosed with a terminal condition, so even if you are alive, you can still get the payout from your health insurance and use it how you see fit. 

Increasing Cover Benefit: Some policies automatically increase your coverage by a set amount to ensure that you always have the necessary protection as you become older. 

Waive of Premium: Some term life insurance plans waive all future premium payments if you are diagnosed with a critical disease. 

Life Stage Benefit: Some policies give the option of raising your total term cover when you hit key life milestones i.e. when you get married, when you have kids etc. This is a good add-on to have when buying a policy. 

Coverage Amount: If your debt-to-income ratio is greater than 50%, you should choose a higher level of coverage. Do not choose the sum assured at random; instead, consider your current financial situation, existing debt liabilities, and family responsibilities before selecting the term life insurance plan. 

Policy tenure: Several key criteria need to be studied when establishing policy tenure. For example, if you are young and have just begun your career, you may want to consider a 40-year term plan, however, if you are beyond the age of 50, a term plan with a tenure of 10-15 years is advised. Aside from that, think about your financial obligations. If you have a home loan with a 20-year repayment period, the policy term should be at least 20 years. This ensures that if you lose your earning capacity or die, the policy payout will cover your debts without putting a strain on your family.

Payout Options: You can use a term insurance calculator to figure out how much your policy will cost after you have a clear understanding of the above parameters. Insurers typically provide a payout in the form of a lump sum or regular income. Keep in mind that the payout option you choose has an impact on your policy premium.

Other Parameters to Consider

1. When picking an insurance company to buy term insurance, consider the claim settlement ratio and the claim filing process.

2. Nowadays, term plans can be customized with the Term Insurance Benefit; review the list of riders provided by your insurer and choose only those that meet your needs.

3. Do not forget to name a nominee in your policy; this will help speed up the claim settlement procedure.

4. Never conceal your medical history or a habit (smoking/alcoholism), since incorrect information will result in claim denial and the loss of any premiums paid thus far.

So we are saying, 

Choosing a term insurance and health insurance plan after assessing numerous aspects will allow you to provide extensive coverage to your family. It is crucial to analyze your monthly income, debt liabilities, and family responsibilities before deciding on the coverage level.