Buying Term Insurance? Keep These 5 Things In Your Checklist

As more people lean towards term insurance, most domestic players have seen a significant uptick in their number of policies issued. So, here goes the checklist:


Photo Credit : Bajaj Allianz Life Insurance,

The COVID 19 pandemic has fuelled the resurgence of vanilla term insurance. With the global COVID related deaths going past half a million and India’s case count rising by nearly 25,000 per Day(1), we are coming face to face with the grim prospect of our own mortality. As a result, many of us are taking a hard look at whether we have enough measures in place for our dependents to live the remainder of their natural lives, if a tragedy were to strike. Many smart savers are recognizing the importance of having a solid term insurance policy in place given that it helps mitigate the financial burden on the family in their absence and will help their loved ones maintain their current standard of living. 

Not to forget, term insurance comes packed with a multitude of other benefits including tax savings, a simple application process, riders that can help widen the coverage, and much more! So, if you’ve taken the wise decision to give a timely shot in the arm to term coverage, here’s a five-point checklist for your benefit.

As more people lean towards term insurance, most domestic players have seen a significant uptick in their number of policies issued.

So, here goes the checklist:

1. Do you actually need a term cover / a term insurance plan?

This might seem like a no-brainer, but don’t rush in to purchase term insurance just because your friends and colleagues are doing it. Remember, Term Insurance is not an investment product, but a pure risk transfer instrument. The question you need to ask is – in case you were to die, would anybody be financially impacted by the loss of your future income? 

If the answer is no, which implies that you do not have any financial dependents, you may not be required to purchase term insurance. In a similar vein, if you have already accumulated a sizeable quantum of liquid assets, you may not really be required to buy a term plan.

If, on the other hand, you have financial dependents – an adequate term cover becomes one of the means of achieving a significant risk coverage.

2. How much do you need?

The primary determinant of your term coverage requirement is your present income. Most Financial Planners agree that ideally, a basic term cover should protect ten to twenty years of your current, post-tax income. 

The second element of your term coverage requirement would be Goal Protection; or ensuring that there’s enough insurance coverage in place to meet your sacrosanct financial goals such as your kids’ education and marriage, even in case of an unforeseen situation or eventuality. 

Thirdly, you need to factor in your liabilities. After all, a family’s ability to clear the hefty EMIs associated with a home or car purchase typically hinges upon the continuity of income from the primary breadwinner’s side. Adding these three together would help you reach your optimal term coverage figure.

3. What is the claim settlement ratio of the insurer?

An insurer’s Claim Settlement Ratio is the most reliable barometer for evaluating its performance. Put simply, the Claim Settlement Ratio is the percentage of the total claims honoured by an insurer, to the total claims made by its customers in a given year. For instance, Bajaj Allianz Life Insurance has a Claim Settlement Ratio of 98.02%*.

These numbers strongly underscore the company’s reliability and commitment to the thousands of policyholders who have trusted them with their family’s futures.

4. Have you considered the right add-ons & features?

Based on your unique circumstances, it may be a wise decision to shell out a little extra and opt for suitable add-ons. For instance, Bajaj Allianz Life Insurance provides you with the option of taking up several useful add-on covers such as an Accidental Death Benefit, Accidental Total Permanent Disability Benefit, or a Waiver of Premium Benefit at a nominal extra cost. 

Additionally, Bajaj Allianz Life Smart Protect Goal product safeguards your family against 55 Critical Illnesses# and covers COVID 19 claims^ too. A qualified Insurance Advisor or Financial Planner can assist you with tailoring your term insurance policy to your personalized requirements, resulting in a comprehensive term policy that will provide you with the necessary cover.

5. Have you declared everything correctly

A final word of caution – remember that the doctrine of utmost good faith or Uberrimae Fidei obliges all parties in an insurance contract to act honestly, and not mislead or withhold critical information from one another. This would apply equally to the proposer as well as the insurer. In a rush to get your term plan issued, do not end up withholding material information such as your smoking or drinking habits, a family history of a particular disease, or a pre-existing medical condition such as a cardiac condition or diabetes. 

Doing so will greatly increase the chances of your claim getting dishonoured at a time when your family will already be reeling from a catastrophic emotional loss. Keep everything above board; it’s better to have your proposal rejected than to have it issued based on incomplete or incorrect information.

We hope this checklist will assist you in taking the decision swiftly.


[1] as of 17th Jul 2020

#Product feature/benefit mentioned above are dependent on the variant chosen

*Individual Claim Settlement Ratio FY 2019-20

^The policy covers COVID 19 claims subject to policy terms and conditions being met.

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Covid 19 impact Term insurance


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