Term Insurance: Give your family a new life after your death.
Untimely death may leave your family with a financial disability. Nothing should take away the comfort of your family that you have curated for them over the years. Take a good decision today for a great future tomorrow.
What is term insurance?
Term insurance is the purest, easy-to- understand and most straightforward form of insurance, which is specially designed to cover the basic needs of the family in case of untimely death of the policy holder during the term of the insurance. As the name suggests, ‘TERM INSURANCE’ is only for a specific period of time and expires after that. The amount can be claimed by the nominee or the beneficiary from the insurance company. Claims can be taken in lumpsum or in monthly instalments, the pay-out method is decided at the time the policy is bought. Some insurance companies also cover the family of the policy holder in case of accidental disability, partial or permanent, which has hurdled the regular income of the family.
Beneficiary or nominee is usually from the family of the policy holder; however, it is not necessary. Nominee can be anybody, a person or a charitable trust, or any organization. The claim can also be divided into 2 or more people equally. It is always suggested to have a backup beneficiary, in case the first one isn’t available for any reason. If the nominee dies before the policy holder, policy holder must nominate a new person for the policy.
Term insurance are relatively economical, because of the high coverage amount they offer with low premiums. With additional riders and benefits the plan coverage increases and helps you get prepared for the unexpected.
Types of Term insurance
It is the simplest form of term insurance, where the premium and the claim amount is fixed and is payed duly after the death of the policy holder within a period of time.
Term insurance caters to all segments of the customers, for those who want premium to be refunded after the term of insurance ends, we have TROP insurance policy. This gives you assured returns after the policy ends, and other features like death benefits, surrender value of the policy etc.
This is a term insurance that can be renewed and has death coverage which is regularly decreasing with time at a predetermined rate. It is more affordable and inexpensive than regular term insurance.
It is the type of policy that decreases death benefit every year. Premium also increases simultaneously with the death benefit, and if kept for a longer period the rate of increment of premium becomes more than the death benefit.
A rider is a modification made in the insurance that adds to the death benefit. They offer cover over the basic sum and come into existence after some time.
Convertible term insurance gives you the feature to convert your term insurance into a full life insurance policy.
Why do you need a Term insurance?
Due to an unexpected event if you lose your life or suffer a disability, term insurance will keep your family covered. For the families who are dependent on just one breadwinner, term insurance can be a saviour.
Term insurance plans are especially designed to protect the financial interests of the family. Depending on what type of pay-out method has been chosen, the beneficiary gets the claim in lumpsum or in instalments. Term insurance will not only provide a good opportunity to your family to be financial independence it also offers the following benefits:
Under section 80 (c) and section 10 (D) of income tax act 1961, term insurance offers many exciting offers on tax benefits.
Policy holder can choose for the term plan that suits him best, it starts from minimum of five years to 25 years or more. However, it is suggested that a longer policy term reaps much more benefits; as premium gets fixed and the policy holder pays the same amount of premium throughout.
The minimum age to enter a term insurance plan is 18 years and it goes up to 65-70 years. However, the amount of premium keeps increasing with age, therefore, it is suggested to buy the policy at a very young age and pay a fixed premium.
Usually the maturity age of a policy is 65-70 years. A good policy is the one which covers most of your age and reduces the financial risk for your family. In term insurance policy maturity age can be extended. It usually covers risks of a longer tenure.
Term insurance gives you flexibility to choose between single life plan or a joint life plan. Single plan covers for one policy holder; however, joint plan covers for 2 or more people. Mostly couples get it for their kids to secure them from financial debts in case both the parents die.
The term plan pays for one or both the policy holders even if one dies before the maturity of the policy
The plans that offer survival benefits are called TROP plans, or Term Insurance Return of Premium. Generally, premium is not refunded if the policy holder survives till the policy expires; however, these TROP plans were specially curated on customers demand refunding them the premium amount if the policy holder survives after the policy expires.
Term insurance also covers, if the regular income of a family is hurdled due to an unexpected accident. Term insurance plans gives additional rider benefits such as critical illness, nominee benefit, permanent/partial disability etc.
Term insurance Riders and their benefits
Riders help insurance holders get their plans tailor made and suited according to their specifications. When the insured dies, beneficiaries receive the designated amount, which can be used in anyway by the beneficiary. However, some policies do not cover the needs of people and hence the term plan becomes of no use. For such situations policy holders can get riders added to their plans and stay tension free!
Supplementary coverage offered by the policy to the policy holder is a Rider benefit. Riders are changes made in the plan that covers for other unexpected events such as:
There is a list of critical diseases that are mentioned in the policy in advance; when the policy holder is diagnosed with any critical disease such as heart attack, cancer, etc or has to go through a surgery the term insurance covers for it. Usually, post a medical examination most of the critical illnesses are included in the policy.Term insurance pays a lump sum to the family to overcome their tough times. Beneficiaries or the policy holder can claim the amount from the company. Following this, the policy may or may not continue till the date of expiry, this entirely depends on the conditions of the policy.
Disability rider should be a part of the term insurance policy, as if due to a sudden accident or an unfortunate event, if the policy holder suffers Partial/permanent disability the term insurance covers the expenses. Especially if the only breadwinner of the family becomes disabled and the regular income has stopped, term insurance policy pays the amount. This rider then becomes the income source of the family.
If due to an accident, policy holder is not able to pay his future premiums, the premium gets waived off and the policy still stays active! In such situations, it is important that rider is a part of your term insurance. If this rider is not active, then the policy gets withered off or expires without any benefit.
After sudden death of the policy holder, this rider comes into action. As per this rider term insurance pays extra income to the family members of the family for the next 5-10 years. Income benefit rider is one of the best riders as it not only pays the claim amount but also helps family to become financially independent over a course of time.
If the insured dies an accidental death, this rider makes sure the term policy pays more than the policy amount to be claimed. The extra amount is calculated on the basis of the original amount and can vary in different organizations.
However, if the insured does not die due to an accident or dies a natural death the basic amount of the term plan is paid without any extra amount.
Rider benefits are a boon for all term insurance policy holders, they are an assurance of great future for your family. Therefore, it is advisable to check thoroughly and add these riders to your policy as per your needs.
How to choose the best policy for you?
We all want our family to be secure and safe in our absence, therefore it is our duty to make the right choices at the right time for their future. To give our family the ultimate happiness and financial security is what we’re working hard for and one right step can secure their future at a very low cost.
A term insurance is a smart backup plan for your family in case anything unexpected happens. It is a simple insurance that is available at low cost and with many benefits. All you have to do is pay monthly premiums up to a fixed period of time and leave the rest on your insurance plan. But choosing the right policy is equally important. Here is a list of points that one must consider before buying a term plan.
Premium is the amount that the policy holder pays to the company in regular instalments in a predetermined rate for his insurance cover. Once paid, it is usually non-refundable if the policy holder survives through the term insurance plan. Checking the premium before buying the insurance is a must. Premium is determined on a number of factors such as health of the policy holder, smoking habits, medical history etc.
Premium is used by the insurers to underwrite the liabilities associated with the plan. It is advisable to use an online premium calculator to determine the premium of the term insurance policy based on your information.
Every insurance company has a different set of features to offer to their customers. Check for plans that offer you flexible features that can be changed for your specifications. You must get rider benefits added to your plan, these benefits give you supplementary coverage for any other unfortunate event such as, accidental disability. You can also get a TROP plan to get your premium refunded if you survive the term plan.
It is advised to the customer to disclose all important details such as smoking habits, medical history, drinking habits, profession, age lifestyle etc to the insurance company so that the policy can be curated accordingly.
Choosing the right company is very important especially in case of buying an insurance. The company should be reliable enough to spend money on. Dig deeper into its previous cases, having a fare look at its financial goodwill will give you an idea of its bankruptcy and reputation.
In such cases, it is advisable to compare the policies offered by each company online and make an informed choice. Online comparison will help you take an unbiased decision without the involvement of any intermediaries.
Check the claim settlement ratio and the history of the company before buying any insurance product. This ratio represents number of claims raised with respect to number of claims settled. The better the ratio, the better are your chances to get your claims settled on time.
You must make sure that in your absence, your family does not face any issue to get the claim from the company, hence choose wisely. Dealing with delayed claim is the most tiring thing to go through. A company might take make you run around the city to get your amount. It is better to know everything about the company before you invest in their plan.
A term insurance policy is always for a particular time period. If the policy holder survives the term insurance policy period, the policy expires, and no money is received.
You must choose a term insurance policy that covers you for a longer period of time, as that is more beneficial. For a longer course of time, policy holder needs to pay only a fixed amount of premium for the policy. It is also suggested to enter in the plan early, as with growing age premium starts increasing.
The specifications that you chose in a plan should be based on your needs and requirements. Most people tend to choose the policy plan that is suggested to them by someone, or due to peer pressure. One must keep in mind that each policy is different and caters to different needs.
Choose a flexible plan that can be moulded for you. For example: If you are young and healthy, you might choose a plan that covers you for a longer period of time with added rider benefits which cover you on accidental disabilities. But if you are married and have children, you might choose a joint term plan for you and your wife that covers for your kids if one of the parent dies before the maturity period.
Getting insurance online or offline makes a huge difference in your purchase. It is suggested to buy policies online as that gives you the advantage to compare between different policies and choose as per your needs. You get to compare on the basis of price, features and benefits. Without intermediaries being involved, you make an unbiased choice and save a lot of money as offline buying is much costlier.
You can use online premium calculators to get a fare idea of the premium you’ll be paying with respect to the policy returns. Online buying also lets you do a lot of research on the available rider benefits, you can choose and add these riders in your policy for supplementary benefits.
Choosing the right term insurance policy is indeed a daunting task, you must take care of these things while making a choice. As your decision today will determine the future of our family tomorrow. In case you are still not able to decide, there are online policy calculators who take your information and suggest you the right policy for you and your family. You can also talk to insurance agents who can suggest you which company has a good record and excellent financial goodwill.
Factors that affect your premium.
Paying a lower premium can help get good coverage amount over a period of years. The amount of premium to be paid by the policy holder is determined by a number of factors. It is indeed a daunting task to understand these factors. However, there are certain factors that under your control and can determine your premium rates.
Age is the first and the most obvious factor that determines your insurance policy premium rates. The younger you are when you enter the policy, the lesser premium you have to pay. Minimum age of entering a term insurance is 18 years, and premium rates are the lowest when you’re 18 as the insurance policy thinks it is unlikely for you to be diseased at young age. Also, your medical needs are very different when you’re young, therefore a lower premium is charged as they think you’ll be easily able to pay it off, before something happens to you.
Although it Is the least important factor, it is still believed that life expectancy depends on the gender. Therefore, premium rates are different for both the gender. On an average female live 5 years more than men, hence men are made to pay more premium than women. But women pay it for a longer period of time.
Smoking is not only bad for health, but also for wealth. Smokers are more likely to be diseased than non-smokers, therefore are made to pay premium much higher. Insurers think that giving smokers a life insurance is so risky that the premium rates can be 1/3times more than regular rates for a middle age smoker and double for a 50-year-old smoker. A medical examination is done before the policy is issues, which determines the rate at which you smoke, as some people get tempted to lie about their use of tobacco while giving their information.
Medical History of the applicant is scrutinised by the insurers. If you have had an illness earlier the premium might go up. This also depends on the type of illness, if the illness is as minute as a viral, the risk factor is not affected. However, proper medical examinations for deadly diseases such as heart attack, cancer etc are done well in advance to calculate the premium. Term insurance covers for such diseases but with much higher premium, the cover may also be delayed due to risk factor.
Profession of the applicant is also a major factor, as the nature of job defines life expectancy of the person. People with deskbound jobs as more prone to cardiovascular diseases. Therefore, this is important for risk assessment. People with dangerous job occupations such as construction workers, people who work with live wires and electrical equipment are charged much more. The basic premium is calculated on the basis of general mortality; however, more is added based on the profession and hobbies of the person.
Your lifestyle will have an impact on the premium that you pay. You can change your lifestyle in order to reduce your premium rates by improving your diet, changing your habits, quit smoking etc. If you travel by plane a lot, or love skydiving and bungee jumping, all these leisure activities may affect your premium immensely. Insurers may scrutinise your regular habits such as driving too. If you are careless and reckless driver get ready to be charged a much higher premium than others.
The longer the tenure of the policy, the higher premium you’ll be charged. Larger tenure means you are covering a larger part of your life, and the company will be covering for your death for a long term. In other words, the higher the tenure, the more the premium you have to pay. However, term insurance is still much cheaper than a whole life insurance.
Being obese and over-weight, invites a lot of diseases. Obesity is a health hazard and can be a cause of deadly diseases like low blood pressure, diabetes, and heart attack. Therefore, the premium charged is a much more for people who are obese or over-weight.
Premium can be paid in any way as per the customers convenience. Policy holder can pay it monthly, quarterly or yearly. The insurers give you a choice to choose from. If you choose the single payment method and pay the premium annually, your premium will be much lesser. Since the company receives payment for the entire year in one go they save a lot of administrative costs. Therefore, premium charged is much lesser than those who choose other payment methods.
Rider benefit give you supplementary payment options in case the policy holder suffers an accident. These rider benefits can be in cooperated in the policy at the time of purchase. However, the more they promise you a secure future, the more they cost you. Rider benefits invite high premium rates. Hence it is advisable to think before you buy a rider for your policy as the premium might burn a big hole in your pocket.
So, if you’re charged a high premium, you can consider these points to regulate your premium as per your needs.
So, if you’re charged a high premium, you can consider these points to regulate your premium as per your needs.
How to file a claim?
Losing a loved one is not easy, it leaves a big vacuum in your life that cannot be covered. However, it is important to know if the diseased person had a term insurance or not. If yes, you can claim the money from the insurer and give your life a new beginning. This way, death of a loved one won’t leave you financially dependent or indebted.
A claim is a formal request of reimbursement that is issued by the claimant to the insurance company to get the insurance money, this claim should be filed, with all documents intact. The insurance company only accepts written and duly signed claim applications.
You can lodge a claim by contacting the company through any of the following channels.
(NOTE: However, you would still need to support your claim with the required documents as demanded by the insurance company.)
Call the company
Lodge a claim online on their website
Since, every insurance company has a different procedure to claim the insurance amount, it is advised to keep a track record of your conversation with the insurance company so that you can take the required steps to claim the money.
To claim the insurance, you need to inform the insurance company about the death of the policy holder and lodge a claim on their website or through email.
In case of natural death
In case of natural death, you need to submit term insurance document, written proof of the claim lodged, death certificate of the policy holder.
In case the policy holder died due to an accident, the insurance company might require a proof of the same. Documents required will a FIR Report, duly signed doctor’s statement, certificate from the hospital, post mortem report.
Once the insurance company has approved the documents, you would need to collect your documents. The amount is usually paid through ECS, therefore, it is important to give correct bank details, cancelled cheque or photocopy of your active passbook. In case the nominee dies along with the policy holder, the next heir in line receives the claim.
Dealing with Claim Delays
Delay in getting the claim amount can occur. This is not only frustrating but can also cause a threat to the financial situation of the beneficiary.
In such situations you need to follow-up from the insurer regularly.
- Know when and why is claim delayed.
- Stay organized and keep a record of your claim number, important dates, and basic information of the insurance company.
- Follow-up in writing so that you can keep a track of the conversation.
- Keep a check of your documents and fulfil all the formalities on time.
- File an appeal and seek help from an attorney in case your claim is continuously being denied.
It is important to be prepared
Whether you are a beneficiary or a policy holder, it is important to always be prepared to face the unexpected. Life doesn’t spare anyone, it throws in a lot of bitter surprises. Term insurance is important as nothing should steal the happiness of your family in your absence. By paying minimum premium you might be able to give them a secured and independent life after you’re gone.
Go through all the available term insurance policies, choose what suits your needs and make an informed choice for your families future. Online policy calculators and premium calculators can be your best friends in making the choice. Keep in mind the various factors that affect the premium rates and get them reduced by changing your life style and health habits.
It is never too late to get insured, get yourself a term insurance today.