A term insurance policy is a simple and straightforward life insurance plan that offers your family financial support and protection in the case of your untimely demise. It allows you to ensure that your family can continue living their life without the burden of debt, without changing their standard of living, and without giving up on their dreams if you are no longer around.
A term policyoffers several benefits and is a prudent investment to consider. However, it’s also essential that you be absolutely clear about what you’re opting for and how it will help you before making this important decision. This is an article that tackles all your term-insurance-related questions.
1.What Should I Look for in Term Insurance?
There are a few things to consider when buying term insurance:
Coverage amount: This depends on factors such as the number of dependents, financial liabilities and responsibilities, future financial requirements, lifestyle expenses, your age, etc. Experts believe that the term insurance cover amount should be about 15 to 20 times your annual income, depending on these factors.
Policy period: The younger you are at the time of term plan purchase, the longer your policy period should be. This also ensures that your premium gets locked in at a lower range. Usually, term insurance is bought until the retirement age. This is because, by then, most dependents are financially independent themselves.
Insurance company: While selecting the insurer, you should consider the benefits they offer in the term insurance plan, such as payout options, including certain fundamentals, such as their
claim settlement ratio, customer reviews, etc.
Online vs. offline purchase: Buying term plans online is becoming increasingly popular in the country due to the added benefits this mode provides compared to buying it offline. When you buy a term policy online, there are no middlemen involved. You can directly buy it from the website of the insurance provider. Hence, the cost is lower because distribution costs or agent fees are not involved.
You can also take your time to research and compare different term plans and understand the benefits well before you make a decision. And of course, the convenience of doing it from your home while saving time cannot be ignored.
2.Can Term Insurance be Claimed for Natural Death?
Yes, term insurance can be claimed for natural death. Natural death or death due to health-related causes is covered by a
term policy. This includes medical complications such as heart attack, kidney failure, etc.
The only thing to keep in mind is that pre-existing medical conditions need to be disclosed to the insurer at the time of term insurance policy purchase to enable claim settlement. Term insurance plans in India also cover death due to critical illness and accidents.
3.Does the Term Plan Premium Change Over the Policy Period?
The term plan premium does not change over the policy period. This is why it is recommended to buy a term plan at a younger age when there are no pre-existing medical conditions, and the life expectancy is higher to lock in a lower premium.
In some situations, the term plan premium may change. For instance, if the policyholder develops habits, such as smoking, drinking, etc., or suffers a disability, the premium may be liable to change.
4.What Happens to Term Life Insurance if I Don't Die?
Typical term insurance plans in India do not have a maturity benefit. Hence, if your term policy expires, there is no payout. However, Tata AIA Life Insurance offers you term plans, such as the Sampoorna Raksha Supreme(UIN-: 110N160V02), that offer a Life Plus Option. The Sampoorna Raksha Supreme term plan offers a unique benefit of return on premium.
If you outlive your term policy, you get an amount equal to 105% of the total premiums you have paid along with the GST@ refund. When looking for term insurance, it is good to consider term insurance with a return of premium option because it offers not just a death benefit but also a survival benefit in the form of recovery of the premiums paid.
5.What is Not Covered in a Term Plan?
A term policy does not cover death in the following situations:
Death by suicide within the first 12 months of the issue or revival of the policy.
Death due to sexually transmitted diseases, such as HIV or AIDS.
Homicide: Murder of the policyholder either due to their involvement in criminal activity or by the nominee.
Death under the influence of alcohol or drugs.
Undisclosed smoking habit.
6.How Do Insurance Companies Investigate Death?
Claims are easily and quickly settled in cases where the term plan premium has been paid regularly for many years, such as over a decade. However, if a claim is made within the first two years of the term policy period, the insurance company may opt for a thorough investigation.
7.Can NRIs Buy Term Insurance Plans in India?
Yes, Non-Resident Indians (NRIs) can buy term insurance plans in India if they are Indian citizens. There are typically specifically designed term insurance plans for NRIs that can be purchased with the submission of all the required documents, including medical test reports and previous ITR forms.
8.Can I Have Multiple Term Insurance Policies?
You can have multiple term insurance policies. It is legal to purchase more than one term policy, and many people do that while planning their financial future. Many opt for multiple term insurance plans with different policy periods to coincide with major life events, such as servicing a big loan like a home loan, children’s higher education, etc.
A very useful benefit of certain term insurance plans, such as the Tata AIA Life Insurance’s Sampoorna Raksha Supreme (UIN-: 110N160V02), is that depending on your changing life needs, you can either increase the term cover or opt for a reduction in the term cover.
9.Is Term Insurance Valid Outside of India?
If the policyholder passes away outside of India, the term plan coverage is valid, and the nominee can file a claim. This stands true even when the policyholder has migrated to a foreign country. The only thing required is communicating this information to the insurer on time and updating the required details, such as the address, phone number, and nominee information.
It is also important to note that depending on your term insurance policy, the coverage may not be valid in countries considered unstable or unsafe, such as a war zone.
10.Does Smoking Impact the Term Plan Premium?
Since smoking is injurious to health and reduces life expectancy, a smoking habit impacts the term plan premium. Some term insurance policies may not charge you a higher premium for being a smoker. However, they will offer discounts on premiums to non-smokers that you may not be eligible for, even if you have quit the habit now.
Now that most of your insurance-related questions have been answered, you can see for yourself the function and utility of term insurance plans. Equipped with this knowledge, you can now confidently make the decision and choose a
term policythat meets all your needs.
Tata AIA Life Insurance offers you comprehensive term insurance plans that cover you up to the age of 100. You can enjoy discounted premiums for a higher sum assured and the flexibility to choose different premium payment terms.
L&C/Advt/2021/Aug/1369
