9 Most Frequently Asked Questions About Term Insurance

What is Term Insurance?

Term insurance is the most basic type of life insurance. It offers your family financial security at the most inexpensive rates. Term insurance allows you to obtain a significant amount of life cover at a low premium cost. The benefit amount is given to the nominee in the event of the death of the individual covered within the policy’s term.

When choosing a term insurance plan, numerous questions might arise in your mind, and if not addressed, you may end up purchasing the incorrect term plan. So, to assist you in making an informed decision, here we have listed the nine most frequently asked questions about term insurance.

1.  Why Do I Need Term Insurance?

Term insurance offers financial security for your family in your absence. You may have availed a loan for education, house, personal reasons, or car. The repayment of these loans might be financially burdensome for your family while you are gone. The earnings from your term insurance can pay off your loans and ensure that your family is not financially burdened.

2.   Will My Premium Rates Change in the Coming Years?

Unless there is a condition in the agreement, the premium of a term plan remains the same throughout the coverage period. If the policyholder acquires potentially fatal habits such as smoking, drinking, or develops a handicap, the insurance company may change the premium. You can use a term insurance plan calculator to find the premium rates.

3.  What Happens if the Insured Person Smokes a Few Years After Purchasing Insurance?

If the insured person develops life-threatening habits like smoking or drinking, it’s better to disclose this information to the insurer at the earliest. It may increase the premium rates but will save the insured from facing complicated situations such as claim rejections.

4. What Happens to the Claim in the Event of an Accidental Death?

In case of accidental death, the insurance company pays the insured amount to the nominee. There are features such as accidental death benefit and critical illness rider in the term plan; they can offer better cover in case of accidental or unintentional injury death.

5.  Is Life Insurance Coverage Available Outside of India?

The term plan is very much applicable in the event of an unexpected death outside of India. Additionally, if the policyholder has relocated to another nation, they must notify the firm to amend details such as phone number, address or nominee. However, if the insured is relocating to a nation that is considered hazardous or a conflict zone, the insurer may refuse to provide this service. However, the life insurance provided by a term plan is valid in nations such as the United States or the United Kingdom.

6.  What if I Reach the Plan’s Maturity?

People frequently ask themselves, ‘What if I don’t die?’. One must realise that once the policy reaches its maturity date, you have several alternatives, including keeping your policy, opting for less coverage if you have fewer obligations, or upgrading your old term policy to a new cover.

7. What is the Claim Settlement Process for a Policyholder Who has Multiple Policies?

In this case, provide details stating possession of insurance from another provider before submitting the form. During the claim procedure, the death certificate is sent to the insurance company with which the policyholder has had the longest relationship. The information is then sent to other firms, and the initial company receives an acknowledgement. These days, most insurance companies do not ask for original death certificates. A photocopy is fine for the claim settlement.

8. How do Insurance Companies Conduct Death Investigations?

If a claim occurs during the first two years after obtaining a policy, the firm conducts a comprehensive examination. A standard claim is easier to pay when premiums are paid regularly, and the insurance term is long (more than 10 years).

9.  Can an NRI Buy a Term Plan?

Yes, NRIs can choose a term plan if they are Indian residents. The documents need verification of address and age as well as confirmation of citizenship in India. You can buy the policy online and submit the paperwork together with the previous three ITR forms and medical test results, during your next trip to India.