A term insurance policy is a necessity for all; it helps you secure your family’s financial future. If you are looking to buy a term plan, you must be aware of certain important facts. Read on to know more.
A term insurance policy is one of the purest forms of life insurance and it is also the most basic financial protection that everyone must have. This insurance policy gives your family the financial cushion against the uncertainties of life. In the event of any unfortunate incident that leads to your demise, the insurer will pay the death benefit to the family member or the appointed nominee.
Today many insurance companies in India offer a variety of term insurance plans. If you are looking to buy a term insurance policy, you may find that there are plenty of choices. To make the right buying decision, you must be aware of certain important facts about term plan, which are discussed below:
Term insurance can provide you coverage up to 75 years
When you buy term insurance policy, it is paramount that you check the entry age and the maximum age of the policy. Majority of the reputed insurance companies provide maximum level cover and increasing cover benefit up to the age of 75 years or more.
Many experts recommend buying a long-term plan so that you can stay protected for a longer period and have an adequate financial buffer for your loved ones.
The sum assured can be 20x your annual income
It is a known fact that term insurance policy has the lowest premium among all other types of insurance policies. But, not many people know that it also offers the highest sum assured, which means you can provide maximum financial cover to your family even in your absence. If you are a first-time insurance buyer, it can be challenging to decide how much sum assured is enough. For this, you must first assess your needs and consider the inflation and decide accordingly. With term insurance, you can buy a policy with a sum assured that is 20 times more than your annual income.
Some insurers allow you to increase the sum assured amount during the tenure
While most term insurance plans available in India are generically designed to suit the needs of the majority, some insurers allow you to customise the plan. For example, if you purchased a policy of Rs. 1 crore at the age of 25, in the future as you get married and have children, you may have additional dependents, so you can increase your sum assured to 2 crores.
But, to increase the sum assured during the tenure, you must provide a written application to the insurer as well as pay the premium on an adjustable basis.
False information can lead to policy rejection
Many insurance buyers tend to hide information about pre-existing illness or other health conditions to avoid paying a high premium. Generally, people who smoke or chew tobacco don’t disclose their tobacco habits and it could increase the premium by 20-25%. But, remember, during the claim settlement process, the insurance companies investigate all the documents and past records and if they find that you have provided wrong information they will deny paying the benefit on the grounds of non-compliance of policy terms falsification of facts.
While buying a new term plan, make sure that you do your due diligence and know about the important facts to make an informed buying decision.