Term Life Insurance is one of the best ways to protect your family financially dependent on you from an unforeseen event. Moreover, purchasing the policy is cost-effective. The best term insurance policy offers a substantial cover at a small premium. However, the premium cost is also based on the policy you buy.
Here are some reasons why you may need best term insurance policy:
- The benefit that term life insurance policy offers to your family will help them cope with the three financial demands of the future.
- It will help them finance their monthly expenses as well as pay for significant events.
- People generally purchase expensive properties such as cars, houses on an EMI basis.
- The policy helps your family with the cover.
To help guide your decision, here is a list of some of the most common questions regarding term life insurance policy.
Term insurance is a type of insuranceproviding coverage for a defined period. If the policyholder expires in the middle of the policy term, the nominee will receive the benefits. These plans are specially designed in order to secure family needs when any uncertainty strikes. Moreover, these plans provide fixed coverage amount.
- Why Are The Premium Amounts Low?
The premium for a term life insurance policy is the lowest in several types of insurance policies available. As the investment component is not part of the plan, the full premium goes only for the covering risk, and thus the premium amount is low. Moreover, survival and maturity benefits do not apply once the term expires. There are some plans which offer a return of the premium paid even the holder survives. A term insurance calculator can help to get an idea.
- How Can We Choose A Term Insurance Plan?
We have to consider some essential factors to choose the best plan.
- History of the insurer.
- The amount we need as cover.
- Claim settlement should be checked.
- Inflation factors in the premium payment along with the coverage benefits.
- Comparing the terms of different insurance companies.
- Never look for a low premium insurance plan as they can have numerous conditions for the claim time.
- We can choose an online plan or an offline plan.
- You can use term plan comparison to get an idea.
- What Are The Eligibility Criteria To Get Term Insurance?
To avail the best term insurance policy, the person must be atleast 18 years old and not more than 65. These criteria may change from one insurer to another.
- What Happens If One Premium Is Missed?
When you miss a premium, you must first know its status through an insurance company. Life Insurance Corporation of India provides 30 days grace period where the premium payment mode is annual or six months. Fifteen days grace period is provided for monthly premiums.
- Is There A Possibility To Surrender An Insurance?
It is possible to surrender an insurance plan before it matures. However, charges will be deducted, which vary among different policies. Insurance companies may not deduct charges if you surrender after a gap of five years.
- The Risks That Are Involved In Surrendering A Plan?
It is always advisable to terminate policy only if you see it doesn’t fulfil your requirements. When you need cash and don’t have any other choice left, you can surrender the policy. You have to note that mostly 30% of the premiums paid would be cut off when you surrender the policy within three years. Some companies deduct all the premiums you paid in the first year. You can use a term insurance calculator to get an idea about the amount that gets deducted.
- Do Non-Smokers Have Different Categories In A Term Plan?
Yes, non-smokers have a wide range of choices. All the smokers or tobacco product users come under the smoker’s category. But those who have left smoking for more than three years also become eligible for favourable premiums.
- What Are The Differences Between Non-Participating And Participating Policies?
In participating policy, the policyholder would get shares in profits of the insurer, which purely depends on the returns of the company’s investment. A non-participating plan doesn’t provide any profit share with the company.
- Can We Convert Insurance Plans To Other Traditional Plans?
Yes, the conversion option is provided in the term life insurance policy. You can convert it to the whole life insurance policy or the endowment plan anytime during the policy tenure without additional charges.
- Is There A Vast Difference In Premium Across The Term Plans?
Premium amount in the term plan can vary from one company to another. Moreover, as the tenure of your policy increases, the premium assured for the same increases.
- Will A Term Insurance Policy Also Provide Tax Benefits?
All premiums of a life insurance policy, including term insurance policies, get exemption from tax under Income Tax Act section 80C of 1961. Moreover, that claim received is also tax-free under section 10D.
Now that you know the answers to some of the most common question regarding term insurance, you can get started to do your research and invest in the best term insurance policy for yourself and your loved ones.
Remember to use the term insurance calculator to compare different add ons, and get an idea about the premiums you will have to pay. A term insurance calculator can surely help you get a clear idea about what all your insurance will entail, and allow you the option to compare plans, enabling you to make an informed decision!
