Do you have a term insurance plan? If yes, this is great. A term insurance policy is a must if you wish to offer financial security to family members, be it parents, spouse or children, when you are not around. Let’s assume you have a home loan and on an untimely demise in a road accident, your family is in deep trouble. Who will pay back the loan? A term insurance policy with low premiums and high cover; protects dependents from financial stress.
Do you know there is an approach called ‘Fill it, Forget it.’ This means you just fill the policy application while availing term life insurance, without even looking at the terms and conditions. When it comes to life and non-life insurance products (This includes term insurance policies), the insurance industry experts advice doing your homework before availing term life insurance plan.
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India is a potential market as far as the business of insurance is concerned. It is poorly penetrated and life insurance has yet to take off in a big way. There are 24+ life insurance companies and 30+ general insurance companies in India as per recent reports. Insurance companies are constantly changing their offers or introducing new term insurance policies to meet ever-changing consumer needs and preferences.
For example, LIC has a claim settlement ratio of 98.04% and ICICI Prudential Life has a claim settlement ratio of 97.88%. At the same time, your financial preferences and needs change over time.
The term insurance plan you avail has to be in sync with your needs and financial goals. For example, when you are a family of 4 members, a sum assured of Rs 50 Lakhs may suffice. If a new member is added to your family (a child is born), then you may need a sum assured of Rs 1 Crore.
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Opt for term life insurance for the financial security of dependents, on an early demise. It covers natural death and death in accidents, but suicide is covered only a year after availing the plan. The beneficiary gets the sum assured on death within the policy term.
Sadly, term life insurance offers no survival benefits. Term insurance can be categorized into level term plans, return of premium plans, term plans with riders, decreasing term plans, increasing term plans and convertible term plans.
Keep in mind that insurance companies offer a wide range of term insurance products to cater to your needs. It is your responsibility to upgrade or renew the existing term life policy. If required, you may have to avail a new term life policy.
Check if existing life insurance policies meet financial goals. If not, avail additional term life coverage. Don’t forget to monitor your life insurance plans to avoid facing difficulties in the future. Let’s assume you have forgotten to renew your term insurance, it lapses and you leave the family without life insurance cover.
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Yes, this is important. Insurance companies ask you to furnish the nominee details while issuing the life insurance policy. You have to be extremely careful while furnishing such details to ensure the right person gets the benefits. The nominee details must be updated without fail. You are given the flexibility to change nominee details across life stages. Be sure to provide the right nominee details. On an untimely demise, your loved ones get the death benefit.
Customize your term insurance plan with riders if required. The most popular term life insurance riders are critical illness rider, waiver of premium rider, accidental death benefit, and permanent disability benefit rider.
So, never take the ‘fill it, forget it’ approach to term insurance. Follow up on the term life insurance plan and make sure it best serves your needs.
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