Do read this article before you buy a term insurance policy – it’s useful information that enriches your knowledge about the product.
If there is anything to be said with any certainty about life, it is that life is totally uncertain.
You could be cruising along, happy and content with your life when the unthinkable happens. Your loved ones are suddenly plunged into chaos, unable to grapple with your loss and finding it difficult to make ends meet. There are unpaid debts, household expenses, children’s education, medical treatment costs…and your family’s financial future is in utter jeopardy.
A term plan is the one-stop solution to these eventualities. It carries the highest sum assured amounts in the insurance spectrum today, which can help your family pay for all its expenses in your absence. Even with the loss of your income, they can fare quite comfortably without compromising on their lifestyle.
But do read up on the following facts about term plans to become more cognisant about the product. You may not yet be aware that –
* The premium increases as per your age and income.
Though term plans are the most affordable life insurance products in India, not all term insurance policies are created equal. The premium may vary from one insurance provider’s products to another. Also, the premium is not the same for all applicants. In fact, the premiums are higher for older age groups, and if you are a smoker or have a pre-existing illness. You can buy term insurance from ages 18 to 65, but the premiums are lower for those in their 20s, and who are non-smokers with no history of disease. One should buy a life insurance policy as soon as they start working.
* You may increase the sum assured under certain conditions.
Also, opting for polices with a top-up options in future is a good idea as you might want to increase your life cover when you get married or have children. Leading term plans have this option, provided you satisfy certain conditions. You can increase the sum assured by Rs 25 lakh maximum –
- On the 5th anniversary of the policy purchase
- Within 6 months of getting married if you were unmarried at the time of taking the policy
- Within 6 months of your first child being born or adopted if you were childless at the time of taking the policy
- Within 6 months of taking a home loan if you did not have a home loan at the time of taking the policy
* You have a grace period in which to make the premium payment.
Every insurance provider in India offers a grace period in which you can make the premium payment every month/year. It is normally 15 days after the premium due date in case of monthly payment, or 30 days after the premium due date in case of annual payment. Do discuss what happens if you miss paying the premium after the grace period is over, to avoid the policy from lapsing.
* There are two types of term plans – participating and non-participating.
You might hear these terms when you browse for term plans to buy: ‘participating’ and ‘non-participating’. What they simply mean is that in a participating plan, the policyholder shares the profit with the insurance provider when the returns depend on the latter. In the non-participating plan, the policy holder does not share the profit with the insurance provider.
Now that you know a little more about term plans, you can sign up for a suitable policy with a leading insurance provider. The term insurance policy is the single most important investment you can make for your family’s wellbeing.