Points to remember while purchasing Term Insurance policy
Purchasing a term insurance policy is a critical choice that must be done cautiously. It is a simple product wherein the policyholder gets life coverage against premiums paid for a fixed tenure. The coverage amount is paid to the beneficiaries by the insurance company if the applicant passes away within the policy tenure. The sum assured amount enable dependants of the insured to be financially stable while taking care of any liabilities left behind by the insurance holder.
But if you are not cautious while investing in it, then your family might need to face budgetary hardships in your absence, regardless of your best efforts. That is the reason we have assembled a rundown of things you should remember while purchasing the best term insurance plan.
- Get sufficient Insurance Cover: Settling on how much cover you require is an essential choice to make and should be taken carefully. You should not pick a random amount like Rs 1 crore like others, thinking that it might be sufficient for you. Also, you have to have enough coverage amount to cover your liabilities such as home loans, everyday costs of your family for about 30 years along with the future objectives like kids’ marriage, education expenses, amongst others. Remember, when you are figuring these costs; you must think about the annual inflation rate as well.
- Mention all your information correctly: It is always advised to disclose all your details accurately to the insurer. Do not try to hide about smoking and drinking to save money on the extra premiums. You should clearly mention about your current health issues as well as past medical conditions. In case you do not so, it will be a breach to the policy agreement with the insurance company, and your claim can get rejected at a later stage. Hence, it would be best if you mentioned everything about yourself correctly starting from age, health condition, medical history, smoking or drinking habits while buying the term insurance.
- Always add nominee(s) in your policy: Adding a beneficiary name is necessary when you purchase term insurance. A nominee can be your spouse, children, or anyone whom you want to pass on the benefits of the term plan. You can be sure that the coverage amount will be given to your spouse and children under the MWP Act (Married Women Protection Act). The act ensures that only the chosen person will get the insurance pay-out amount in your absence.
- Adding riders to your term plan: Term Insurance riders are an add-on advantage that gives you extra coverage apart from the base life insurance policy. Here are some popular riders which you should choose as per your requirements:
- Critical illness rider – A critical illness rider pays a lump-sum amount to the nominee(s) of the policy if the insured gets diagnosed with some critical illness, specified in the policy.
- Accidental Death Benefit Rider – This kind of rider pays an additional coverage amount to the beneficiary in case of the policyholder’s demise due to an accident.
- Waiver of Premium Rider – In this rider, the future premiums get waived off if the policyholder fails to pay premiums due to loss of income or any other reason, while the policy remains the same.
- Income Benefit Rider – With this rider, the dependants get extra pay yearly for a period of 5 to 10 years. The best part of this rider is that the amount given is an addition to the basic coverage amount.
- Mention all your existing policies: It is essential to disclose all your current insurance policies while buying another insurance policy as hiding such details might lead to the rejection of your claim. The details include the name of the insurance company, coverage amount, and policy number.
Term life insurance is one of the essential investments that every individual should include in their financial portfolio. Term plan not only provides financial stability to your family when you are not with them but also helps them in achieving their future goals. Therefore, by keeping in mind these pointers, you should make a wise buying decision that can be helpful for your family. You can visit BimaKaro.in to look for various term plan offers, get free quotes from the tops insurers, and choose the right one for you and your family.