Before buying a life insurance policy, we recommend that you go through the following important tips to understand the term insurance policy in a better way and make an informed choice while purchasing the term life plan.
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The term life insurance plan must be availed across working life. It must be availed till the time you have family liabilities and debts. Choose the tenure wisely as premiums are high as you grow older. Term insurance is the most affordable way of securing your family for the long term.
Term insurance offers no survival benefits. The nominee gets the death benefit, only if the policyholder dies within the policy tenure. This is why they are called pure risk protection plans.
Term life plans are not for investments. The main aim of these plans is to secure family finances in case of an untoward demise. So, you can choose to opt-out of the policy anytime you want. You can just stop making premium payments and the policy expires with no maturity payouts.
The term insurance plan comes with a high death benefit at nominal premiums. The amount of coverage availed depends on the premiums. Your financial situation changes with time. Therefore, while availing term insurance, you must choose the sum assured based on factors like inflation, debt obligations and family responsibilities and avail cover that remains adequate even in the future.
All life insurers ask the policyholders to go through a medical examination before issuing the term life policy. The medical test is performed at a clinic/hospital which has a tie-up with the insurer.
The test includes measuring the height and weight of the individual, collecting blood and urine samples and collecting data on the medical history or hereditary conditions of the policy buyer. The term policy premiums are determined based on the test results.
A main benefit of the term insurance plan is that the death benefit paid to the nominee is tax-free. Unlike other investment avenues, the term insurance plan is specifically designed to extend financial support to the family of the policyholder and transfer wealth if policyholder dies within the term of the plan.
See Also: Why You Need A Term Insurance Plan?
The term insurance premiums are generally higher for smokers and nicotine users. This is because the smoking habit exposes people to the health risks of lung cancer, heart ailments, stroke, aortic aneurysm and so on.
Make sure you mention the smoking habit (If you are a smoker), in the term life insurance proposal form.
If you are a regular smoker then you will be charged a higher premium. Sometimes, insurers refuse to insure heavy smokers. If you try to hide this fact your insurer can detect nicotine in blood and urine samples. So, if you are planning to purchase term insurance; quitting smoking is a good idea.
A rider means extra cover at slightly higher premiums. The rider benefit allows you to modify your term policy and add certain benefits to it, like critical illness cover and accidental death benefit that is generally excluded from the basic cover.
See Also: What is a Term Life Insurance Policy?
The insurance company would hold back the settlement in case they believe that death was due to intoxication or the use of drugs. Make sure to bring necessary changes in your lifestyle, to avoid rejection of insurance claim.
An increasing term life plan is one where the sum assured chosen increases each year. The premium may or may not remain same across term life policy tenure. The cover depends on health of the insured when buying the term policy.
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