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Term Insurance 4130 views September 16, 2019
The purpose of buying term insurance is that your nominee(s) or dependent(s) have enough money in hand that would make up for the loss of income in the event of your sudden death. This means that in addition to focusing on the amount of sum assured that you are paying for, it is important to choose a term insurance plan from a life insurance company with a high claim settlement ratio (CSR) or the one that boasts of the hassle-free claim settlement process.
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The first important step that you must take is to inform your loved ones about the term insurance cover you have bought as a measure of financial security. Your nominees must be told about the amount of death benefits that you pay for and the reason for which you have chosen this amount. Policyholders who have taken loans must educate their beneficiaries about how they can use the amount of sum assured to simply pay off the loans.
Life insurance companies classify death into two categories. These include:-
– Early deaths: If the policyholder dies within three years of buying the policy, then it is classified as “early death”.
– Non-early deaths: All deaths after the completion of three years of the term insurance plans are categorized as “non-early deaths”.
It is important that policyholders educate their loved ones about the documents that they must submit to ensure easy and quick claim settlement. These include:-
Moreover, the nominees must be warned that they must seek claim within a week or two of the death of the policyholder. Taking too much time may cause the insurance company to reject their claim.
Though the concept of term insurance remains more or less the same throughout, different insurance companies have different regulations regarding the same. This explains why policyholders should be aware of the details written in fine print about the same. In addition, they must read carefully about the types of deaths that are covered or not considered under the policy.
Many people look for enhanced coverage with their term insurance plans. This explains why many life insurance companies in India offer added benefits like term insurance riders that avail added benefits in addition to the predetermined amount of death benefits.
The important term insurance riders include:-
In most term life insurance policies, the policyholder(s) or their nominee(s) get nothing if the former outlive the policy period. However, some term life policies contain the “Return of Premiums” clause. Inclusion of this clause means that the policyholders get back the entire amount of premiums they had paid towards their term policies.
To claim back the premiums paid, policyholders will have to approach the insurance company and submit the claim settlement form duly filled with necessary details and signed along with the original copy of the policy proposal. The total premium amount will be paid back to the policyholder post completion of the policy period.
Buying a term insurance policy does not guarantee claim settlement unless the policyholders take care of the following conditions:-
Any incorrect detail submitted unknowingly or inadvertently is sufficient reason for the life insurance company to reject the claim. Customers must fill in the details given in the policy proposal form correctly. Relying on the agent to fill the form will only increase the chances of erroneous details. Also, interested customers must not be ambiguous about their lifestyle habits including smoking, drinking, etc.
Knowing the ins and outs of the policy helps. Customers before signing on the dotted line must make sure that they understand the policy features, benefits, inclusions and exclusions of the policy that they have decided to pay for.
Buying a policy is not enough. It is important to update the necessary details and keep an eye on the fund value regularly. Any details regarding the change in nominee details must be notified to the insurance company immediately.
Most policies get lapsed because there had been no one to claim the death benefit or maturity amount. Uninformed nominees suffer a financial setback as the death of the family’s breadwinner exposes them to risks synonymous with financial problems and the burden of loans and liabilities.
Dependents must be aware of where the documents lie. Also, it is important that policyholders keep the policy documents in order at a safe place to ease their nominees’ claim settlement process.
Buying term insurance is the first step to ensure financial security to one’s family. However, needs and requirements differ. This explains why customers must assess their needs to determine the exact amount of sum assured along with their choice of the policy period. Quick and hassle-free claim settlement means that the policy has served the purpose for which it had been bought.
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