In the world of personal finance, a calculator is a great starting point. It helps you quickly estimate a suitable premium for a ₹1 crore term insurance policy based on your age, lifestyle, and income. But a sound financial decision requires more than just a number. Choosing the right term insurance plan is about creating a secure future for your family, and that involves looking at factors that go “beyond the calculator.”
Here are five critical factors to consider before you finalize your ₹1 crore term insurance purchase:
1. The Insurer’s Claim Settlement Ratio (CSR): The Ultimate Test
This is arguably the most crucial factor. The Claim Settlement Ratio is the percentage of claims that an insurance company has successfully paid out against the total number of claims it received in a financial year. A high CSR (above 95%) is a strong indicator of a company’s reliability and its commitment to honoring its promises. You are buying term insurance to ensure your family receives a payout in a time of need; a high CSR gives you the confidence that your loved ones won’t face unnecessary hurdles during the claim process.
2. Solvency Ratio: A Measure of Financial Strength
While the CSR tells you how many claims are settled, the Solvency Ratio tells you if the company has the financial capacity to settle them. It measures an insurer’s ability to meet its long-term financial obligations. India’s insurance regulator, IRDAI, mandates a minimum solvency ratio of 1.5 (or 150%). A company with a strong solvency ratio is better positioned to handle a high volume of claims, even in the face of a major unforeseen event like a natural disaster.
3. Riders: Customizing Your Coverage
A standard ₹1 crore term insurance policy provides a lump-sum payout in case of your demise. But what about other life events? Riders are optional add-ons that enhance your policy’s coverage for an extra premium. Some of the most valuable riders include:
- Accidental Death Benefit: Provides an additional payout if your death is due to an accident.
- Critical Illness Rider: Offers a lump-sum amount upon diagnosis of a critical illness, which can be a lifesaver for medical expenses and lost income.
- Waiver of Premium Rider: Waives all future premiums if you become permanently disabled or are diagnosed with a critical illness, ensuring your policy remains active even if you can’t work.
Carefully consider which riders align with your needs to build a truly comprehensive safety net.
4. Policy Term: How Long Do You Need Coverage?
The term of your term insurance policy should cover the period during which you have significant financial responsibilities. This could be until your children become financially independent, your home loan is paid off, or you have accumulated a substantial retirement corpus. While a long-term policy might seem expensive initially, it locks in a low premium and saves you from the higher premiums of buying a new policy at an older age.
5. Understanding Exclusions: Know What’s Not Covered
Every insurance policy has exclusions—situations or events where the death benefit will not be paid out. Common exclusions include death due to suicide within the first year, certain pre-existing medical conditions not disclosed at the time of purchase, and death due to engaging in illegal activities. It is crucial to read the fine print and clarify all exclusions with your insurer to avoid any surprises for your family later.
Choosing a ₹1 crore term insurance plan is a long-term commitment. It’s a promise to your family. By looking beyond the basic premium and considering these five critical factors, you can make an informed decision that provides not just a financial payout, but genuine peace of mind.
Santosh Kumar is a Professional SEO and Blogger, With the help of this blog he is trying to share top 10 lists, facts, entertainment news from India and all around the world.
