Term insurance plan is a basic risk protection plan. It is a term contract between the insured and the insurer. The insured avails the policy by paying premiums on a monthly or annual basis. Sum assured is paid to nominees if policy holder dies within the term of the plan. Premium paid in a term insurance policy is low vis-a-vis endowment plans. An insured would spend a small portion of his/her annual income to avail a term life insurance plan. Term insurance would financially benefit the family, if the insured meets an untimely end. Term life insurance has no survival benefits.
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Best Term insurance comes as a boon when there is a home loan/property loan against your name. The loan can be repaid and children can continue their education. Term insurance is about providing financial protection to your family. Term insurance is recommended if you are in a hazardous job, job requires frequent travel and working at places where the climatic conditions are extreme. Term insurance is a necessity if you are the only breadwinner of your family. Term life insurance could save family from a financial crisis on an unexpected demise. It is a smart move to avail a term life insurance plan.
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If you are a smoker/drinker, you need to clearly mention this in the insurance proposal form. Your application would still be accepted, it’s just that you would be charged a slightly higher premium. This is because the risk borne by the insurer is high. Claims could be rejected if the insurer finds you were a smoker/drinker and you didn’t disclose this.
The insurer can contest the claim filed by the beneficiary. In case the insurer has any doubts vis-a-vis the demise, then they have all the rights to contest the claim. For example, you were a smoker and hid this. The insurer has all the right to reject the claim.
Contestability is the time period after which the insurer cannot decline insurance for any reason. Insurer cannot claim that you hid medical condition or smoking/drinking habits to deny claims for any reason after the contestability period. You need to read this clause thoroughly before signing up for a term insurance policy. There are a wide variety of riders (add-ons) you can choose for extra benefits.
Availing riders would give extra benefits. These riders can either be bought at the start of the policy or anywhere within the said term of the policy.
The following are the popular riders;
Accidental Death Benefit Rider: This rider would provide an additional amount along with the actual sum insured on insured’s demise in an accident.
Critical Illness Rider: A lump sum amount is paid to the insured if he is diagnosed with any critical illness like heart attack, stroke, kidney failure and so on.
Accidental Disability Rider: This rider provides lump sum amount or monthly pay out, when the insured is disabled in an accident, which would cause loss of income.
Waiver of Premium: This rider would waive off future premiums to be paid and the policy would still be active if the policy holder is unable to pay more premiums due to unemployment or loss of income due to any other reasons mentioned in the policy.
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