When choosing a term insurance policy, more than selecting a reputed and trustworthy insurer who can provide coverage in times of need is required. You also need to evaluate the term insurance quote. By doing so, you can assess the premium amount you must pay to get your desired coverage and determine the policy’s affordability.

This ensures that you can provide financial coverage to your loved ones in your absence without straining your budget. Also, you do not need to hire a professional to do so. You can analyse the policy quote by just keeping a few things in mind.

Keep reading to learn how to evaluate your term insurance quote for free!

A term insurance quote is the amount of premium that you need to pay in order to get coverage. It is generally based on the type of policy, the sum assured, and selected add-ons. Also, the quote will tend to vary across insurers based on factors like the applicant’s age, health condition, mortality rate, lifestyle habits, and more. 

Thus, choosing the right term insurance quote is crucial to ensuring you balance your desired coverage and affordability.

1. Base Premium Amount

The base premium is one of the main components of a term insurance quote. It is the basic amount that you have to pay, not including the taxes or cost of optional riders, in order to gain insurance coverage.

Base premiums usually vary across insurers based on factors like the applicant’s age, sex, occupation, lifestyle habits, and more. In this regard, the base premium for smokers is higher than that for non-smoker applicants. The former poses a higher risk to the insurer, and thus, they charge a higher amount for providing coverage.

2. Sum Assured

In term insurance, the sum assured is the amount received by your nominees as the death benefit in case of your unfortunate demise within the policy tenure. Thus, you must choose a sum assured that is enough to cover your family’s financial needs and life goals (like higher education and marriage).

In this regard, the higher the sum assured, the greater the premium amount, and vice versa.

3. Policy Tenure

Policy tenure refers to the duration for which the term insurance plan offers coverage. Experts recommend choosing this time period based on your age, lifestyle, and family’s financial requirements.

The longer the policy duration, the higher the premium amount will be. However, once the premium amount is set, it remains the same throughout the policy tenure.

4. Riders or Add-ons

There are several optional riders, like accidental death benefit rider, critical illness rider, etc., which you can add to your term plan to enhance its coverage. They provide financial protection under circumstances not covered by your base term plan.

However, these riders come at a cost, and adding them will effectively increase the premium.

Premium Payment Frequency

The premium payment frequency is the specific duration after which you need to make your policy payments. Generally, insurers enable you to opt for a monthly, quarterly, half-yearly,  or annual payment frequency.

In this regard, if you have a higher premium amount, consider paying it monthly, quarterly, or half-yearly so that you can divide your payment throughout the year instead of a lump sum amount every year.

Premium Payment Term

Also, you must consider the premium payment term, the period you need to pay your policy premium. It can be equal to or lower than the policy term; in the latter case, the premium amount will be higher.

However, if you are starting your term plan at a young age, you can opt for a shorter premium payment term. The reason is that young applicants tend to get lower premiums. If you complete the payments within a limited period, you can enjoy the policy coverage in your later years without paying anything else.

Insurer’s Claim Settlement Ratio

You should always go for an insurer with a high claim settlement ratio. They should also have a transparent and streamlined claim settlement process with a dedicated support team.

In this vein, even if you have to pay a slightly higher premium for a reputed insurer that satisfies the above criteria, it will be much easier for your nominees to file a claim and gain coverage in times of need.

Personal Spending Capacity

Now, it all boils down to your personal spending capacity. The premium amount should be such that you can pay it on time without straining your budget. Otherwise, it can delay payments, resulting in fines and even a lapse of the policy.

Thus, experts advise you to choose a premium quote well within your spending capacity. Doing so can ensure timely payments even when you have to cut corners to align with your budget.

1. Focusing Only on Premium Cost

2. Overlooking Riders and Add-ons

3. Ignoring Policy Exclusions

Usually, cheaper term plans come with many exclusions mentioned in the policy’s terms and conditions. Thus, they might not provide adequate coverage to safeguard your loved ones financially. 

So, even if you have to opt for a term plan with a slightly higher-priced premium, ensure that policy exclusions do not include something that can affect your family’s coverage requirements.

4. Choosing Insufficient Sum Assured

Often, individuals choose a policy with an insufficient sum assured because of its low quote. However, that can harm your family’s financial well-being in your absence. The reason is that opting for a lower sum assured may not be enough to cater to your family’s future financial needs.

Also, inflation tends to drive up prices, making the sum assured inadequate. Hence, it is always recommended that you choose a term insurance quote by balancing affordability and coverage.

5. Going for the First Option

Your financial needs and risks change as you progress in life. Thus, it is crucial that you periodically re-evaluate your term insurance policy so that you can gain the required coverage as per your current life condition. 

Here are a few effective ways:

Availing Higher Coverage

If you notice that the sum assured from your current policy is not enough to cover your family’s future financial needs, you can consider buying another term plan that adds to the existing coverage.

In this regard, you can go for a term plan with a guaranteed insurance rider that enables you to add coverage during certain life-changing events, like having children. This rider allows you to add coverage without going through the hassles of applying for a new policy.

Changing the Beneficiary

Going for a Different Policy