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10 Questions to Consider When Buying Term Life Insurance ‍

Term life insurance offers affordable protection against the financial consequences of losing a loved one. But, buying term life insurance isn’t always an easy decision

Questions to Consider When Buying Term Life Insurance

Buying a term insurance plan is an important decision that can have a lasting impact on your finances. Term life insurance offers affordable protection against the financial consequences of losing a loved one. But, buying term life insurance isn’t always an easy decision. As with any other financial product, there are pros and cons to consider before making a purchase. Keep reading to learn more about buying term life insurance and what you should consider when looking for the right type of coverage.

What is term life insurance?

Term life insurance is a type of insurance that provides a death benefit in the event of the insured’s death. However, this type of coverage has a limited lifespan. The death benefit provided by a term life insurance policy expires at the end of the policy term. There are no maturity benefits involved in the case of a term insurance plan.

What do you need to consider when buying term life insurance?

– Cost – The premiums are crucial as they need to be paid for a long period of time. So you must be careful about getting a term plan as early as possible to get the best premiums. You can calculate the premiums using a term plan calculator online.

– Coverage amount – The sum assured should be high enough to provide ample support to your family for an extended period of time. The ideal cover amount for a term insurance plan is usually 15-20 times your current annual income so that your family has smooth sailing in a time when there is no income.

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– Term length – Another important aspect of a term plan is the policy period. It should ideally last you till the time you are working. So to calculate the term, subtract your current age from the age till which you plan on working, and you will get the ideal policy term for you.

Are the premiums locked for the entire policy term?

Owing to the upholding of certain clauses by the policyholder, the premiums are locked for the entire policy term. That is why getting a term insurance plan early in life is recommended to lock low premiums for the entire term.

What is the effect of smoking on the premiums?

Yes, smoking and your health play a part in calculating premiums for your term plan. Make sure that you disclose the accurate details of your lifestyle so that there is no snag in the claims process later on.

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What if the policyholder meets an accidental death?

Most term plans pay out death benefits in case of accidental death, and some require an accidental death rider to be added to enhance the scope of the policy. Similarly, you can also add riders for critical illness and disabilities.

What if the policyholder meets an untimely demise in a foreign country?

As long as the policyholder is moving or temporarily residing in a country that is deemed safe by the insurance provider, the insurance will be active. Just make sure to inform the insurance company about the move and update your contact details.

Are there any maturity benefits?

No, in a pure term plan, there are no maturity benefits. You can opt for a return of premiums plan, which will not include any profits. For an element of investments, or savings, opt for a ULIP or Endowment plan.

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What kind of death is not covered by a term insurance plan?

Usually, death due to terrorist acts or death by natural calamities are excluded by insurance companies, so you need to ensure what is covered and what isn’t in the term insurance plan you are purchasing.

Can you buy a term insurance plan if you are an NRI?

Usually, the companies require address proof from the policyholder. If the person is a resident of India, they can submit their documents and purchase the policy online and give some documents like ITR and medical reports on their next visit to India.

What is the claim settlement process?

The claim settlement process is straightforward, given that you have given all the right details when purchasing the policy. To begin, just inform the insurance company of the policyholder’s demise, and then they will take you through the rest of the process.

Wrapping Up

A term insurance plan is a type of insurance that provides death coverage for a set term. It can be a great contingency plan for your family in case of your untimely demise. Although fairly simple to understand, there are a few considerations that you must have before going in for a plan. Some will make you choose the right plan for you, and some will enhance your knowledge and help you navigate the process. It is essential that you be thorough in your research so that later there is no snag later. Start your research about the perfect term plan today!

First published on: 08-08-2022 at 12:44:42 pm
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