Term life insurance today is an essential investment that a person has to make in order to protect themselves from financial duress in difficult times. Expenses are constant in difficult times as well, from bills to loans one has to maintain their financial obligations and also build their savings for future expenses. In a post-pandemic economy, the importance of being prepared for the future with the best term life insurance has become more apparent than ever.
In the event where the income supporting these expenses is disrupted, one can face great distress and resort to liquidating important assets and savings. A term insurance plan is one that ensures such a situation can be mitigated by offering coverage and monetary benefits at the end of one’s term tenure which can be used by the policyholder to fulfil their long-term goals or investments.
Term life insurance can be defined as an insurance instrument which enables the coverage of the needs of the insured and their dependents through an assured benefit sum in the event of the policyholder’s demise. A standard term plan in India is considered to be one of the most affordable means of securing one’s future where premiums are low and one can customise their coverage and payout methods as per their convenience.
It is vital that a potential policy holder goes through all policy documentation and verifies all their necessary features before investing. Therefore, let us look at the important questions to ask to identify the best term life insurance:
- Is the premium subject to change in the future?
The premium payment of an insurance policy maintains the coverage provided by the insurance provider and adds to the payout that is assured to the beneficiary at the end of the policy term. In the event that the policyholder has lifestyle developments like smoking, or disability and it is declared to the insurance provider then the premium might increase. Generally, premiums for term insurance for all age groups vary on the basis of several such personal factors.
- How does smoking effect the policy?
If the policyholder has tobacco dependency then the premiums of a term life insurance policy is more than that of a standard term life insurance policy. This has to be revealed to the insurance provider as it places them in a separate medical risk pool. If the smoking habit is kept from the provider they may increase premiums or terminate the term life insurance policy.
- What is the claim for Accidental Death?
In the event that the insured is incapacitated permanently or disabled by an accident, the accidental disability rider can be availed to claim a recurring income from the insurance provider, which is usually a percentage of their sum assured.
This rider coupled with the best term insurance plan can be useful for families with a primary income earner, whose incapacitation may gravely affect their finances. This rider works like an income replacement, where the coverage may last from 5 to 10 years after the accident or as stipulated by the life insurance term plan.
- What if the policyholder survives the term life insurance tenure?
A standard term life insurance plan does not offer any maturity benefits at the time of the tenure ending and the policyholder surviving the policy tenure. However, as an additional rider one can avail return of premiums in the event the insured lives beyond the policy tenure. After policy completion one can receive their premiums except for the taxes, and additional rider costs.
- What deaths are not covered under term insurance?
A term life insurance policy provides coverage for most types of death and accidental circumstances barring some exceptions. Therefore it is important for a potential policyholder to be fully aware of the policy literature to avoid unforeseen claim denials later. A term life insurance plan does not cover deaths caused by terrorist attacks, natural calamities like earthquakes or tsunamis. It is important to note that deaths caused by terrorist attacks may often be settled by humanitarian funds if the beneficiary reaches out to the Insurance Regulatory and Development Authority.
- Is Term Life Insurance valid if death occurs outside India?
A term life insurance policy is still valid of the insured passes away overseas. In the event such a situation transpires, after due communication is passed onto the insurance provider the claim can be settled as per the provisions of the plan. The only clause difference is that if the insurance provider has dictated certain unsafe countries within their policy documents and the insured passes away in one of these countries then the company may defer the claim.
The best term life insurance policy, therefore is an important asset for an individual to have that can help them and their family navigate through difficult times without financial and emotional distress. Equipped with added benefits like insurance providers that have prompt settlement reputations, customisable coverage, rider options and a good claim settlement ratio, the policyholder can be secure against most unforeseen situations.