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Term Insurance 763 views January 20, 2019
The idea of buying a term insurance policy is slowly gaining grounds as an increasing number of people are looking for measures to keep their loved ones secure in the long run. However, many people miss out on understanding important considerations without which the idea to purchase term insurance is futile.
Ensure to include term insurance as an essential element of your investment portfolio. As per terms of a term insurance contract, the insurer is liable to pay death benefits in return for regular premium payments. A term insurance plan is like an umbrella that helps protect your loved ones against economic uncertainty resulting from sudden death.
You need not to be money minded in nature. However, you must have a mind sane enough to ensure a financially secure future for your family in your absence. This means that in addition to the host of investments you make and the amounts of savings you may have set aside, there is an ardent to buy a financial cover to shield your loved ones from possible economic difficulty post your demise.
For this, it is important that you buy a term insurance plan. Unlike any other savings or investment product, term insurance plans are pure life insurance products that ensure a fixed amount of predetermined life cover to the nominee(s) or dependents of the policyholder(s) in the event of unfortunate death.
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A lot of customers inquire about the best term insurance plan available in the market. Without realizing the significance of term insurance, most people tend to ignore certain considerations which must be kept in mind before buying term insurance. They are:-
Young people do not consider seriously the certainty of death. Bad news never has good timing, which means that death can be sudden and unexpected, thus, leaving behind a family reeling under grief and economic uncertainty. Also, a major percentage of people postpone the idea of buying a term insurance policy not realizing that buying later will result in greater premium payment. Insurance premiums are less if you buy it by the time you turn 30 years old as delay in buying insurance or postponing the purchase to a later period means that you get to avail the same cover at increased premium rates. Also, the amount of life covers available decreases with growing age. This means that buying term insurance of your choice entails greater benefits when bought early.
“How long must your policy period be?” is a question that has no definite answer. Many customers opt for a shorter term to avail the benefits of paying lower premiums. However, most term insurance plans do not offer survival benefits. This means that you lose out on the premiums paid if you survive beyond the policy term. Also, post completion of the shorter policy period that you had opted for earlier, you may need to consider buying another term policy at increased premiums. This is because a policy bought later costs more than bought early.
It is important that you do not fall into the trap of a shorter policy period and, therefore, lower premiums. Remember, that term insurance is bought to financially secure your family against the sudden loss of income due to death. This means that if you are buying term insurance while you are still young, you must consider opting for a large policy period to ensure that your family gets death benefits as per the policy terms in the contract.
Claims of most term insurance plans get rejected due to policyholders failing to disclose necessary details while buying the policy. Many customers do not share details of their medical problems or illnesses while buying a term policy. If the insurer while acting on the claims made by the nominee(s), finds out that death of the policyholder has been owing to a nagging health condition which he or she had not declared while buying the policy, then the insurer has the right to reject the claim made and declare the policy null and void.
While filling in details on the policy form, submit correct details of your age, health conditions, smoking and drinking habits, lingering illness and other details as requested in the proposal form. To avoid rejection of claim made by your nominee(s), make all necessary declarations and disclosures while buying the policy.
Though most term insurance plans operate on the same inherent concept of providing comprehensive financial security in case of sudden demise, the charges and cover are different in each. The premium rates continue to differ among most insurers with each promising the same amount of cover corresponding to differing premium charges. While most customers compare premium charges only, it is important to take other factors into consideration including the reputation of the insurer, claim settlement ratios, availability of rider benefits and duration of policy period available.
Agreed that some term insurance plans come with its own set of rider benefits, albeit at added premium charges. However, the availability of riders does not mean that one needs to avail them. Take charge of your existing needs to check if you really need to avail the rider benefits. For example, if you have already bought a critical illness insurance plan or an accident insurance policy, it would be futile to pay extra for the rider benefits like the accidental death benefit rider and the critical illness benefit rider that may be available with the term policy.
Buying term insurance is a necessary decision that must be taken after much consideration and care. It is important that you examine the pros and cons of each kind of plan and make necessary disclosures to facilitate seamless death benefits claim to your nominee(s) or dependent(s).
There are many important considerations involved in buying a term insurance policy. It is necessary to understand each of them before proceeding to purchase term insurance or any kind of life insurance policy.
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