Important Questions to Ask Before Buying a Life Insurance Policy

Term policies are considered to be the pure life insurance product. They give your family

financial security during a difficult period in their lives after your untimely demise. Over

the period of time, policies have evolved to include additional benefits in the event of a

critical disease diagnosis. Most people today recognize the value of having a term

policy. Given that India still has one of the lowest life insurance penetration rates on the

planet (2.74%), it is reasonable to assume that many Indians are hesitant to get a term

insurance policy. Therefore, deciding on the appropriate term insurance plan for your

needs can be challenging. Here are some questions to ask yourself before acquiring a

policy either online term plan or offline:

1. Will the term insurance premium amount change after purchase?

It is usual practice to schedule premium payments well in advance, therefore it is

unsurprising that this is a frequently asked question. Fortunately, the premium amount

of a conventional term life insurance policy should remain constant throughout its

duration unless expressly stated otherwise in a provision at the time of purchase. Of

course, if the policyholder gets a disability/lifestyle condition later in life, most insurance

firms will still be able to increase their premium.

2. Can my bad behaviour affect the cost of a term insurance policy?

While this is mostly determined by the company’s policies, activities such as smoking or

drinking that have a negative impact on a person’s life expectancy do affect the cost of a

term life insurance policy and the amount of each premium payment. Some

businesses require consumers to declare any life-threatening habits at the time of

purchase, while others will accept policyholders who have avoided such behaviours for

a few years before the purchase.

3. How can my lifestyle ailment affect a term plan?

Customers who are prone to developing addictions should think twice before acquiring a

term life insurance policy because habits such as smoking or drinking cause insurers to

place the policyholder’s case into a different risk pool. Since the policyholder’s life is

now in danger as a result of their lifestyle problem, life insurance firms reserve the right

to charge higher premiums or, in severe situations, cancel the coverage entirely. To

avoid the denial of a death benefit claim by the dependent in the event of an

unexpected death, policyholders should disclose any information about such

undesirable habits to the company well in advance.

4. Can NRIs buy term insurance?

Yes, as long as they have documents proving that they are not a liability, such as proof

of age or address in India. When you buy online term plans in India, you can send these

documents to the insurer remotely, and the appropriate medical reports can be

completed when the individual returns to the country.

5. Can insurers refuse to pay claims for certain deaths?

Yes. If the policyholder dies as a result of terrorist acts, natural disasters such as

earthquakes or tsunamis, and so on, the insurer is not obligated to pay the nominee the

sum assured. Such claims are occasionally settled thanks to the involvement of the

Insurance Regulatory and Development Authority. It is generally advisable to read such

terms and conditions before making a purchase of an

6. What happens if a person carries multiple policies?

Transparency is vital in the insurance world, which is why you should always inform

them that you have numerous policies before signing up for a new one, especially if it is

from a different provider. It is critical that the person filing the claim submits the death

certificate to the firm with the longest-running policy in the deceased individual’s name.

The companies should also be notified, along with an acknowledgement from the first

company that the settler approached.

7. Can nominees receive death benefits if they die outside of India?

Yes, assuming that the policyholder has told his insurer that he has relocated to an

outside Indian location, as s/he should with any change in personal information,

including phone numbers and addresses. However, keep in mind that the insurer may

withhold the death benefit if the policyholder dies in a nation considered high-risk, such

as one known for terrorism and violence against its citizens. In countries such as the

United Kingdom and France, term insurance policies are typically valid.

8. How thoroughly do insurers investigate the circumstances of the death?

This depends on the type of claim. An early claim, when the policyholder dies within two

years of acquiring term insurance, necessitates a comprehensive investigation because

it is costly for the insurer. However, if it is a regular claim in which the policyholder has

paid his premiums for more than a decade, the business will relent and settle the claim

without conducting a thorough inquiry.

9. Can candidates collect the death benefit in the event of accidental death?

Usually yes. Regardless of how the policyholder dies, term insurers must pay the

assured sum to his or her dependents. However, you can supplement your existing term

life insurance policy by purchasing additional riders that cover accidental death,

permanent disability, or critical illness. This ensures that the nominee receives

additional funds beyond the sum assured upon the policyholder’s death.

10. What happens if the policyholder lives longer than the maturity date?

If the policyholder lives longer than the term insurance policy’s maturity date, insurers

are not required to pay any sum assured. This generally irritates consumers, thus it is

critical to ask such questions before purchasing a plan. However, many banks allow you

to update your policy by using a conversion privilege, which allows you to exchange

your old policy for a new and permanent one. It is strongly encouraged to choose a

policy that allows for premium increases as well as the ability to pay for new expenses

such as your children’s education or mortgage.

At last,

By now you must have understood that getting insurance coverage for you will help in

securing the future of your loved ones. In today’s world, one of the most common ways

for people to protect their dependents and families is through a term life insurance

policy. However, choosing the wrong decision from among the many possibilities

available can have serious consequences for your long-term financial goals. In the

aforementioned points, some of the most often-asked issues and concerns about term

insurance coverage have been addressed.