70% people in India take money back plan in the name of insurance. Either due to lack of knowledge or they come in the trap of agents who in order to meet their target sell such plan. Or due to the fact that there is no return in case of term plan. In case of money back policies the cover offered is very less compared to term insurance.

But remember that term insurance is more beneficial especially to the single earning member in the family or when the dependents are more. This is because in an event of death of the breadwinner of the family, the nominee will receive sum assured of over 25 Lakh (depending on the chosen plan). Whereas in case of money back plan your dependents will receive a small sum of Rs. 2-3 Lakh only. Although term plan is expensive as investor has to shell out premium which is higher than money back plan.

It is the responsibility of the person to think about the family’s future so that his family does not have to face any financial hardship in the future.

Here are the tips on buying term insurance:

1. First and foremost requirement is that you should not think of term plan as an investment product.
2. Buy Online: It is recommended to buy term plan online as it saves time and money both. Also before buying, list down your financial objective and choose the plan that best fits your requirement. Also consider cost factor before finalizing. Many companies offer discounts especially to individual’s who do not smoke or do not have any life style illness.
3. If you are unhappy with the purchased policy then you can return it and claim the refund during the free lock-in period.
4. Make your nominee aware of the features and benefits of the plan. Also make him/her understand the claim procedure. Try to maintain all the policy related documents in one place. This is be handy when the real need arises.
5. Policy should be purchased only from the companies with a very high claim settlement ratio. If the premium is low and ratio is poor then avoid such companies. While evaluating, it is always advisable to consider premium as secondary option and claim settlement ratio the first.
6. Choose a company offering easy claim settlement process. This will benefit the nominee in the time of need.
   Inflation should be taken into consideration, if you are planning for a long term plan.
7. Nominee should be chosen carefully. Although changing nominee is possible but still try to name a person whom you trust.
8. Another aspect to consider is an option of enhancing the cover. If someone wants to start small and at a later stage company permits to increase the cover by paying additional premium, then it is good. This option would be mostly suitable for singles who might want to raise the cover when they get married.
9. Adding rider is another aspect to consider when choosing a term plan. Many companies provide an option to add riders which is nothing but add-on to the policy. Typical riders cover disability, job loss, critical illness, and others. During claim policyholder will receive benefits which are in addition to the policy.