There have been many instances when you plan to buy a term plan, but availability of many options may have confused you in choosing the best one suiting your requirements. And finally you would have postponed it, to buy it some other time when you will actually be having time to compare and study various features offered by different plans.

However, you need to keep in mind that mishaps happen suddenly. So instead of being ignorant, it is better to be proactive. If you know what you need, it will be easier for you to choose a term plan.

Here we are going to discuss some of the major features that you need to consider while buying a term plan. Understanding your needs will be easier if we compare online term plans of four different insurance companies. Let us compare i-Life secure of Aviva, Online Term Option III of Max Life, Reliance Life’s Online Term and Bharti AXA’s eProtect.

For instance, a non-smoker, 30 years old person needs a term plan of Rs. 1 crore. Age around 30 years is the peak time when you have responsibilities and some of these you carry forward as the time moves ahead. Till the time you reach the age of 55 years, you are able to fulfill most of your responsibilities. So coverage of 25 years should be enough for a 30-year-old person.

Maximum entry age

For young people, this may look like an irrelevant point to compare, but it is important for those who have not bought any life insurance policy till the age of even 40 or 60. Your age at which you buy influences the premium amount to a great extent. You can buy i-Life till the age of 50 years, Max Life offers the plan till 60 years, the Reliance Life’s Online Term Plan is available till 55 years and Bharti AXA offers the plan in the age range of 45 to 65 years.

Maturity age

You should look for the plan that offers maximum maturity age so that you are covered till your maximum possible age. i-Life and Online Term Option III have maturity age of 70 years and Reliance Life and Bharti AXA have 75 as maximum maturity age. If the insured dies within the maturity period, his nominee is entitled to get the sum insured and if death occurs after the expiry of the term, no benefit is provided.

Premium payment

Though, online term plans are well-known for being cheaper, there can be discriminating difference in rates due to an applicant’s medical condition. For a non-smoker, 30 years old with no trace of any known health condition or any critical disease in family history, Aviva is charging a premium of Rs. 12,977 annually, Online Term Option III is available at Rs. 14,717 annually, the Reliance Life’s online term is available at Rs. 15,162 annually and to get eProtect of Bharti AXA, premium of Rs. 15,281 has to be paid annually.

With lowest premium, you also get to choose the frequency for paying the premium that is half-yearly or annually in case of Aviva’s i-Life Secure. For the rest of the three plans, premium has to be paid only annually.

Policy term

Generally, term plans are bought for the term ranging from 10 to 30 years, but each company has its different feature-structure. You would find the premium for eProtect and Online Term Plan on the higher side. Then again, if you compare the policy term, these plans offer longer period for coverage. You may get tempted to buy the Aviva’s i-Life Secure but if your preference is highest maturity age or longer period of coverage, you should buy one out of the rest of the three policies with the lowest premium.

Death benefit

Term plans are known as pure vanilla plans. Every company pays the sum insured at the demise of the policyholder, however, the differences are still there in the way each company pays the death benefit. i-Life Secure pays a lump sum of 10% of the sum insured at the time of death and rest is given by paying 6% of the sum insured at the end of each year, for 15 years. Online Term Option III provides the chosen sum insured as benefit and the rest of the sum insured is received by the nominee at the end of every month for 10 years. While term plans by Reliance and Bharti AXA provide a lump sum benefit at once.

If you think it is better to receive monthly instalments, the second plan is most suitable. Receiving annual instalment will be beneficial in case there is an alternate source of earning and family needs huge amount to pay for bigger liabilities annually.

Free Look period

Grace period is same for all the four policies i.e., 30 days, but there is a difference in the free look period. Free look period implies the time period when you can study the details of the policy after acquiring it and can return it within this specified period if you find it not-good-enough for you. You get this opportunity for 30 days if you buy i-Life Secure and Online Term Option III and just the half of this if you buy term plans of Reliance Life and Bharti AXA.

Longer free look period is the best option but it takes only a few days if you want to examine each and every feature of the policy. If other features are worth spending, you can go easy while considering free look period.

Availability of riders

A rider is an additional benefit that one can choose to have or not to have. Some companies give you a choice while some add the riders to make a plan even more useful. However, including any kind of rider will automatically increase the premium amount. If you need a specific rider either ask your insurer to add it to your base plan or choose a plan with a rider.

Here we have an Accidental Benefit Rider attached to the Max Life’s Online Term Plan III. If you do not have any other insurance plan to get accidental benefits, it is a good option as the premium amount is not that high as it would be after having another separate accidental plan. Nonetheless, if your health insurance provides you this benefit, you can choose to have any other plan after prioritizing your preferences.

Conclusion

While choosing a plan, you also need to consider the brand, the market share of the company, its rating on websites like ICRA as well as find out for how many years the compared company has been operating. Though IRDA has set strict norms for insurance companies to maintain a solvency ratio and they also have the option of re-insurance to balance the risk which obviously will diminish their chances of getting halted, but it always pays to be on the safer side.

Choosing an apt term plan is, of course, a tedious task, but if you really care about how instances happening in the future can affect your family’s way of living, you should take some time out from your busy routine to understand the best possible route for the protection as soon as possible.