A term insurance plan has come up as a popular substitute for a life insurance plan. These plans offer financial safety to your family or dependents in case of your untimely demise. It is recommended that you buy term insurance plans as early as you can. This is because your premium gets decided on the age at which you are buying the policy.
Financial decisions are often difficult to take, especially ones related to plans. There are several things that one must consider to buy the best plan available in the market. Therefore, to help you out, below, we have made a list of questions to ask yourself before buying a term insurance plan.
Is the premium bound to change in the future?
To check whether the premium remains the same or changes with time, you will have to read the policy document offered by the firm carefully. If the premium is bound to change in the future, it should be specifically mentioned in the offer document. Usually, the premium of the insurance remains the same.
An exception will be if the policyholder brings up a change in the premium. This is usually because of the policyholder developing life-threatening diseases/ habits or any type of disability. On such occasions, only the company can apply a premium rise.
How do smoking habits affect the policy?
If you have the habit of smoking/drinking while you are getting the policy, you will have to disclose it to the company as this affects your life expectancy. On the other hand, if you develop any of such habits after you have brought the policy, you will have to disclose it to the company then as well.
Consequently, it will impact your premium. As mentioned above, the company has the authority to impose loading or even cancel the policy. It should be kept in mind that the policyholder does not have the option to not disclose these habits as it would breach the clause.
Is the claim settled in case of accidental death?
Yes, even if the policyholder has experienced an accidental death, the company will pay the dependents or family members. The reason does not make much of a difference; therefore, the sum assured would be paid irrespective of whether the death is natural, accidental, or due to an illness.
Along with that, there are several additional benefits known as riders which the policyholder can choose. Some of these include critical illness riders, accidental death benefits, and permanent disability riders. By going for these additions, the policyholder can assure some extra amount over the basic sum assured.
Are cross bordered deaths considered?
Even if the demise takes place outside of India, the sum assured will be paid to the nominee. The necessary step for this is to disclose your migration to the company to know about the situation. Much like how you need to disclose a change of phone number and other such information, you also need to disclose your address.
Moving to some countries, such as Pakistan, Burma, etc., can affect your insurance policy as these countries are considered unsafe. It may lead to the company deferring the facility. Apart from that, it is usually valid for foreign countries.
What if a person has more than one policy?
If you have two policies, then it is crucial for both the companies to know about this fact. The form that you fill out for availing of the policy itself has the option where you can disclose your other policies. At the time of death, the company which was held for the longest is provided with the death certificate first.
After that, the other company is informed. Only after the acknowledgment from the first company has been received, the other companies initiate the procedure. However, this also varies from company to company as many companies do not require an original birth certificate; a photocopy works as well.
How proficient are insurance firms in investigating death?
The investigation process depends upon whether the claim is an early one or a normal one. If the claim takes place within the first two years of purchase, it is considered an early claim usually. However, this differs from insurer to insurer. A thorough investigation is conducted by the firm if an early claim is made.
Which deaths are not covered?
A common piece of information that most people do not know about is that term insurances do not cover deaths due to terrorist attacks. However, these claims may get settled on humanitarian grounds if the nominee decides to contact the IRDA.
The questions mentioned above will help you make an informed decision about your term insurance plan. Along with that, you should compare different policies together to get the best term insurance premium. Most importantly, you should read all the documents carefully, and you will be good to go!