Buying an insurance policy requires a lot of patience. You have to understand all its aspects before finally figuring out which one is crucial for you. Since term insurance is mostly for an extended period, you have to be doubly sure.
Often while looking for a term insurance policy, we tend to get confused. It is evident since there are a lot of add-ons to the policy itself. Some questions crop in the mind of the customer.
Here we share 10 such questions that can stop you from making the correct choice.
1. Will the premium of the policy change over the duration?
First of all, if there is no clause mentioned in your policy, the premium should remain constant. There can be no alteration in the premium either by the policyholder or by the insurance company. However, if the company gets to know that the policyholder has developed a life-threatening condition, they might increase the premium. Click here if you need to get any other information with regards to term insurance.
2. What will happen if the customer starts smoking after purchasing the policy?
In case the policyholder develops a smoking habit or any other habit that can reduce life expectancy, they should inform the insurance company about it. If the company gets to know about it, they might increase the premium on their own or just cancel your policy altogether. Also, if you have been a smoker and your family goes to claim, the company may reject the same. They would cite a breach of clause of disclosure of all information.
3. Will policy cost more if a person has a history of smoking?
This fact varies from one policy to another. Some companies want the policyholder to state if they are smokers or drinkers explicitly. In case the person has quit, they have to mention the date of doing so. On the other hand, other companies may accept a person as a non-smoker if he has not done so for the last three years. It is always advisable to check with the company terms and conditions when looking for term life insurance quotes without personal information.
4. Do you get your term insurance claim if death is accidental?
Yes, term insurance does pay even if the death is accidental. The sum assured is paid irrespective of what the cause of death was. However, to provide a boost to your term insurance plans, you could add accidental death benefit, critical illness rider, and permanent disability rider to it. By attaching these riders, your nominee may get an amount more than your sum assured if the death happens due to reasons mentioned in the riders.
5. Is the term insurance valid if death happens in a different country?
If you read the terms and conditions of the policy, it is mentioned that irrespective of the place of death, the claim will be processed. However, if the policyholder has shifted bases to another country, then they need to inform the company of the change. If the information is not shared, the company will not be able to entertain any claim requests.
6. What happens if death does not occur in the term?
Sometimes people get upset that they do not get any maturity benefit if they survive the term of the policy. If it bothers you, then know that there are some changes that your policy faces at the end of the time. You can extend your policy for a longer duration, but then the premium would rise. However, if all your responsibilities have been covered, you could go for no extension of policy.
7. If a person has more than one policy, how is the settlement done?
If you already have a similar policy, you should mention it in your form. After adding all the details, you can submit the form. If the death happens, a death certificate should be submitted with the insurance company where the policy has been running for the longest duration. Afterward, you can submit the document to other companies along with acknowledgment from the first company.
8. How efficiently do companies investigate death?
Companies do understand that a lot of things are at stake here. A lot of fraud happens in the name of insurance policies, and companies want to avoid them. If a death has occurred within two years of the policy, they investigate the entire matter thoroughly. This is primarily because companies believe that the policyholder could have hidden any terminal disease from them. As the duration of the policy increases, insurance companies investigate death but not so ardently.
9. What kind of deaths that term insurance will not cover?
Deaths due to terrorist attacks are usually not covered under term insurances. Apart from that, they also exclude natural calamities like earthquakes and floods. When taking up a policy, you ought to check all these aspects. You can, however, add riders if you feel that you are living in an area where natural disasters happen frequently.
10. What happens if you discontinue the premium payments?
Ideally, you should continue paying the premiums if you want the benefits. However, if you have missed a premium, there is a grace period to make the payment. If you miss the grace period, then the policy might lapse, which is not a good sign. In a lapsed policy, they reduce the sum assured, so if you want to restart the policy, it will not be beneficial. Hence you should always pay the premium and if it gets delayed make sure the extension is not beyond the grace period.
The term insurance plan gives you a lifetime of peace. At the end of your term, you get the sum assured. If the death happens midway, your family is given enough to restart their life on a firm financial footing. Do not, however, purchase your insurance policy in an instant. Understand the quotes from all providers and read the terms and conditions too. Choose a policy you feel meets all the criteria that you are looking at.