While selecting a term plan, the premium is recommended to be the deciding factor. But there are few other factors which are more important than the premium. The single biggest criteria of selection should be the policy exclusion. Generally, term plans don’t have too many exclusions. But there are some and you need to know them. Let me give you an example. A pure term plan from CompanyX is low on premium whereas one from CompanyY offers higher premium. Going by widely accepted (and recommended) logic, you would go for the plan from CompanyX. But let’s get into some details. The exclusion policy for CompanyX-plan includes death due to riot and few other unnatural causes of death among others. On the other side the only exclusion for CompanyY-plan is suicide. So, if you had read the policy details, you would have rather selected policy from CompanyY even though it is costlier.

Another not-so-technical deciding factor is your comfort/belief with/in the insurer. This may seem to be an emotional issue, but seeing big private insurance players near collapse (AIG etc), it does become an important factor. All the talk about insurance being a contract, insurance regulation etc is on one side but your personal faith in the insurer does make sense. I know this is a contrversial suggestion, but i would anyday prefer being safe than sorry. Remember all the experts telling you that having 10% of your portfolio in cash is makes no sense? Well, check out the experts now and see what they tell you.

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