Source: The Hindu Business Line

Insurance companies offer a confusing range of products, with fancy names and many bells and whistles. But the most important type of insurance you should buy is still the plain term cover. It comes pretty cheap, too. But do you just buy one? What are the main things you should know while buying a term policy? You need to be aware of factors such as what the insurance policy actually covers, the amount you need, premium rates, riders, medical tests, tax benefits and the mode of buying, among other things. You should also know the fine-print aspects such as splitting amount across policies. Term insurance, unlike endowment policies or market-linked plans, is not an investment at all. It does not give you a return. It merely seeks to cover risks. That is why term policies are the cheapest insurance you can buy. Specifically, a term cover is taken so that your family is not financially deprived in case you were to die suddenly. Now that you know it’s cheap, should you just splurge on a Rs 1-crore policy? Your life is priceless, isn’t it? Maybe it is, but there is a scientific way to decide how much term cover you need. The concept is called human life value. This is nothing but a sum of all your current and future liabilities. The next important thing to do is to decide on the tenure of the policy. This should ideally be till you decide to retire.