Finance

Most Commonly Asked Questions About Term Insurance

A term insurance plan is an insurance product that protects your family’s financial security in case of an unfortunate event. Life is unpredictable, and you can never know what will happen in the future. This is why it is sensible to invest in a term plan to provide for the family’s finances in your absence. If you do not have adequate knowledge about the insurance product, you could make the wrong choice. Here are some of the frequently asked questions (FAQs) about a term insurance plan to help you make a well-informed decision.

A keyboard with a green button Insurance

  • Does the premium vary over the years?

This is a term life insurance FAQ that you should be well aware of. The premium will remain the same throughout the period, and if you develop any life-threatening habits, the company could alter the amount of premium.

  • What if there is a death due to an accident?

The amount assured will be paid to the nominee if there is an accidental death of the insured. You can choose to add riders, which give better protection at a slightly higher premium.

  • Which death is not covered in term insurance?

Death caused due to a terrorist attack is not covered under a term insurance plan. Moreover, any natural calamity like flood, earthquake, or tsunami is not covered in the plan. It would help if you remembered this when you buy a term plan online.

  • Can NRI’s buy term insurance?

It is a lesser-known fact that NRI’s can buy term insurance if they are a resident of India. The insurance company will need specific documents like age proof and address proof to prove that they reside in the country. An NRI can buy a term plan online and does not need to visit the country. The NRI also needs to submit the documents and the medical test reports, and the last income tax returns for the past three years during the next visit to India.

  • Is the cover valid outside of India?

In the case of the policyholder’s death outside the country, the plan is valid. If the policyholder migrates to a different country, it is important to inform the insurance provider. If the insurer moves to a different country, which is unsafe, the insurance company does not give it. The plan is valid in the U.S. and U.K.

  • What happens when you reach the maturity of the plan?

This is an important term life insurance FAQ. Many people question the insurance company about the proceeds when the plan matures. There are options like retaining the policy if you want to, or you can opt for less coverage or upgrade the old policy for a new cover.

  • How does a company investigate death?

In case of death within the first two years of buying the cover, the company will do a thorough investigation. If you pay the premium on time and the policy is for a longer period, the settlement of a claim is easier and quicker.

It is advisable to gain clarity on the policy before you invest in one. Clarify your doubts when you choose a plan and ensure that it is most suitable for your needs.

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