The more we live and move forward with life, the more responsibilities fall on our shoulders. An unmarried person has lesser responsibilities than someone married with children. If you fall in the latter category, having a financial backup plan that protects your family is crucial.
Term insurance is the most straightforward protection you can buy for your family. It is simple in how it works, and the best term insurance in Singapore will protect your loved ones if you pass on.
However, because many companies offer term insurance plans, choosing the right one can be challenging. Here are five tips to help you make a wise decision.
Think of Your Dependents and Life Stage
The primary consideration when choosing a term life is your current life. Even policy sellers will evaluate your age and financial situation when deciding which coverage to offer you. These factors affect how long your policy will last and the amount of term insurance coverage suitable for you.
Remember that all of us have different responsibilities. If you are the family’s breadwinner, they may depend on that money for a long time before they stabilize themselves. On the other hand, an unmarried person may not have many dependents.
Consider Claim Settlement Ratio
This means the number of claims settled every year is based on the total claims made annually. If many people are paid out, your dependents will likely not have a hard time claiming the insurance in case of your demise. Therefore, they will continue living comfortably.
Please remember that you are buying term insurance to secure your dependent’s future. So, if the settlement ratio is high, there are high chances that their future will be secure. But note that while the claims settlement ratio is crucial, it’s also wise you determine the number of claims your chosen insurer settled. The claim settlement ratio becomes significant only when the insurer pays out many claims.
Determine the Buying Ease and Customer Service
We all want convenience, and this isn’t different when buying insurance. Individuals these days want plans that they can access and purchase online. Nowadays, no one wants to experience the hustle that comes with filing a lot of paperwork. The e-policies have simplified things for customers, and you only have to fill out the policy document online and send it to your email, where you can access it anytime.
Additionally, it’s also essential to examine the kind of customer service an insurer offers. The last thing you want is to work with an unresponsive team when you are stranded.
For this reason, it’s always wise to ensure that the insurers offer responsive, excellent customer service. Note that an insurer’s customer service will determine how slow or fast your issues are resolved.
Analyze Your Income and Existing Liabilities
Many people are unsure and often do not know how much money to contribute to term insurance. A good start will be to analyze your income and understand how it will work out. Everyone has a list of financial responsibilities that require a portion of their income.
You need to evaluate these duties when deciding the amount to save each month.
Also, it’s essential to calculate your loved ones’ financial requirements to avoid overestimating or underestimating your term insurance cover. If your income can’t meet the premium amount, you may strain your finances.
Additionally, you also should consider any debt and liability that you may have. Many people have a loan they’re paying for an extended period. If the term insurance plan you choose won’t repay the remaining loan or if your amount is less, it can put a massive burden on your dependents.
Check an Insurer’s Solvency Ratio
Solvency is another way to check a company’s capability. An insurer must always have more assets than liabilities to keep their company running. This helps them have enough funds to pay out claims when they are made. Always opt for a company with a higher solvency ratio, as they will likely honor your loved ones’ claims in case of your demise.
Lastly, you also should consider adding riders to your plan. These are essential instruments that insurance companies provide to enhance a term insurance policy. You can attach riders to a base policy when purchasing but note that you will pay extra premiums.
Some riders you can attach to your term insurance include critical illness, accidental death, a disability rider, and waiver premium riders.
Who Needs Term Insurance?
The answer is that it depends since many factors come into play. Term insurance aims to provide financial protection to your loved ones in case of your untimely demise, which means a loss of income.
Losing income also means that your family will not be able to cater to education and other expenses. Plus, if you have debt like a car or home loan, your family members will be forced to pay if you die.
Term insurance can help cater to these expenses. So whether you need term insurance depends on your financial goals, dependents, and liabilities.
Also, some plans cover critical illness. Therefore, term insurance may be best for you if you are at risk of cancer or heart ailment.