When purchasing a term insurance plan, buyers often have a number of questions. In the event that individuals have looked at multiple term insurance policies, they become uncertain about what is a term insurance and how claim settlement would proceed.
Some people are uncertain about whether they would receive coverage outside of India or whether term plans come with term insurance tax benefits. We have addressed all of the questions to be asked before buying a term plan:
- Would the cost of a term insurance policy premium purchased now fluctuate in the future?
Unless otherwise specified in the offer document, a term insurance policy’s premium must stay constant for the duration of the policy as long as the policyholder does not request a modification. In other words, the policyholder must not become disabled or develop a (life-threatening) drinking or smoking habit. Upon notification of any such developments, the firm may impose a loading (increase in premium), changing the premium as a result.
- What would happen if someone decided to resume smoking after they had the policy for a few years?
After purchasing the policy, if the policyholder has developed a habit that could shorten their life expectancy-decreasing behaviours like smoking, binge drinking or other behaviours that could shorten the policy, the policyholder must disclose this information to the insurance provider immediately after acquiring the policy. If this occurs, the insurance provider may impose loading (an increase in premiums) on the current premium or even revoke the contract.
- Would a history of smoking increase the cost of the policy?
This varies from policy to policy; for instance, some policies state that the client must report whether or not he has ever smoked or consumed alcohol, as well as the date on which he stopped.
- In the event of an accident passing away, are term insurance claims successful?
In the event of an accidental passing away, term insurance does pay. Whatever the reason, the sum assured or cover amount would be paid upon the passing away of the insured.
- If a demise happens outside of India, is life insurance still regarded to be valid?
Term plans are absolutely valid, even if the passing away occurs outside of India. This information must have been shared with the insurer by the policyholder. He needs to let the insurance company know that he now resides outside of India.
- What if I don’t pass away?
When customers learn that their term insurance policy has no maturity benefit, they frequently become angry. If it worries you, you should endeavour to comprehend any potential alterations your policy might undergo as the term comes to a finish.
- Premium increase – For several years, the rates for many term plans have not increased.
- Less coverage – You always want your insurance to protect you until you have obligations to meet, such as a mortgage or the college tuition for your children. You might decide not to renew your coverage if those are your requirements and you don’t have any other commitments to worry about.
- Policy improvement – Most term insurance contracts have a “conversion privilege.” This enables you to exchange only your previous term insurance for new permanent coverage.
- How is claim settlement handled when an individual has many policies?
In these situations, it is crucial to acknowledge in the proposal form that you already have a policy from firm ABC. Once all required information has been provided, the form should be submitted with the necessary information.
- How well do insurance firms look into fatalities?
The terms “early claim” and “normal claim” are distinct. The company conducts a comprehensive examination before settling the claim if it occurs within the first two years of obtaining the insurance.
- What types of fatalities are excluded from term insurance coverage?
Term insurance does not provide coverage for fatalities due to Terrorist Attacks.The Insurance Regulatory and Development Authority (IRDA) may later satisfy this term insurance claim on humanitarian grounds when the nominee contacts them. However, this condition is typically not included in contracts. Additionally, natural disasters or acts of God are not covered. Visit the official website of IRDAI for further details.
- Can NRIs purchase term insurance?
Yes, NRIs may obtain term insurance plans, but they must reside in India because the insurance provider has to see confirmation of your address and age to confirm that you are a resident of India.
You all would benefit from knowing the answers to what is a term insurance with these FAQs as you choose a term plan. Since the aforementioned concerns have been clarified, choosing and later purchasing term insurance is no longer discouraging. Among other benefits of term insurance, one can also claim term insurance tax benefits.
The tax benefits mentioned in the article may not apply if you opt for the new tax regime since many tax exemptions and deductions have been scrapped within the new regime.
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.