Page 45 - The Insurance Times November 2025

Consumers

Do’s and Don’ts While Buying a Term Insurance

Policy

Do’s (Things You Must Do) Avoid unnecessary riders that don’t suit your life
goals.
1. Assess Your Coverage Needs Carefully Why: Knowing inclusions, exclusions, and waiting periods
Calculate the Human Life Value (HLV) — your in-
helps avoid future disputes.
come, liabilities, family expenses, future goals (edu-
cation, loans, etc.). 5. Choose the Right Policy Duration
Ideally, cover yourself till your planned retirement age
Ideally, the sum assured should be 10–15 times your
or till your major financial liabilities (like loans) end.
annual income to ensure your dependents can
maintain their lifestyle. Don’t take overly short terms just to save premi-
ums.
Use online HLV calculators or consult an advisor to
get the right estimate. Why: A longer policy ensures your family remains protected
during your most financially active years.
Why: Underestimating coverage can leave your family fi-
nancially vulnerable. 6. Review Claim Settlement and Service Reputation
Always check the Claim Settlement Ratio (CSR) —
2. Disclose All Facts Honestly a higher ratio (>95%) indicates efficient claim ser-
Provide accurate details about your age, occupa-
vicing.
tion, income, lifestyle, and medical history.
Look at customer reviews, grievance redressal
Declare smoking/drinking habits and any pre-exist-
timelines, and digital servicing facilities.
ing illnesses truthfully.
Why: In emergencies, smooth claim processing is more im-
Why: Concealment of facts may lead to claim repudiation
portant than small premium savings.
later, even after years of paying premiums. Term insurance
relies on the principle of utmost good faith. 7. Opt for Online Purchase When Possible

3. Compare Plans from Multiple Insurers Online plans are cheaper (5–20% lower) as they
Evaluate different insurers on premium rates, claim eliminate intermediary commissions.
settlement ratio, solvency ratio, and policy features. You can directly customize, compare, and apply
Use IRDAI’s annual report or verified comparison through the insurer’s website.
portals to make an informed choice. Why: Online policies offer transparency, control, and docu-
Why: Term insurance is a long-term commitment; select- mented proof of disclosures.
ing a stable and reputed insurer ensures peace of mind. 8. Nominate Wisely and Keep Records Updated
4. Understand the Policy Terms and Riders Nominate your spouse, parent, or legal heir. Up-
date nomination if family circumstances change.
Read the policy brochure and key benefit illustra-
tion before signing. Keep a copy of the policy document and payment
receipts in a safe, accessible place.
Riders such as Accidental Death Benefit, Critical
Illness Cover, and Waiver of Premium can add value Why: Wrong or outdated nominations cause claim settle-
at nominal cost. ment delays or disputes.

The Insurance Times November 2025 41