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

Most Commonly Asked Questions About Term Insurance 1

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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 compensation.

  • 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.

Death caused due to a terrorist attack is not covered under a term insurance plan. Moreover, the plan does not cover any natural calamities like floods, earthquakes, or tsunamis. It would help if you remembered this when you bought a term plan online.

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

The plan is valid in the case of the policyholder’s death outside the country. If the policyholder migrates to a different country, it is important to inform the insurance provider. If the insurer moves to a foreign 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?

The company will do a thorough investigation in case of death within the first two years of buying the cover. 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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