Buying term insurance is vital for everyone but is pretty hard to choose the right plan. Numerous questions may pop in your head when it comes to buying term insurance:
“How will the claim settlement work?”
“What is the validity of the policy?”
“Is this the best saving plan for short-term or long-term?”
These are some of the many questions that you might have. Well do not worry, we
have prepared a list of questions that can help you understand the policy better and provide you with ample insight to choose the right one. So, read on to know more.
Questions to ask before Term Plan
- Does the Premium Amount Change with Time?
The term insurance premium remains same throughout the policy period unless a clause is mentioned in the offer document that it might change. However, if the policyholder brings up or wants some changes in the policy, then the term insurance premium is subject to changes as per the company policies. For instance, if the policyholder develops a significant disability or starts taking toxic substances than the premium rates may change.
- Does Smoking History Affect Policy Cost?
Yes, having a smoking history does affect the cost of the policy. However, each insurer has different risk pools based on the smoking habits of their customers. If you smoke regularly, then the cost of the policy is high, and if you were a smoker and left it some time ago, then the premium amount is decided as per the company norms. Insurers like Max Life Insurance accept people who have not smoked for three years as non-smokers.
Put simply; you must always mention your smoking habits in the form.
- What If A Non-Smoker Starts Smoking After Purchasing the Policy?
If the policyholder starts smoking or drinking excessively after purchasing the policy, s/he must reveal this fact to the policy provider. Smoking and drinking reduce the life expectancy of a person and in terms of policy providers a person who smokes and drinks, falls in a different risk pool than a non-smoker or drinker. If a person refrains from providing this information to the insurer, as a breach of clause mentioned in the offer document, the insurer can decline his claim.
- If the Death of The Insured Occurs Outside India, Will the Term Plan Be Still Valid?
Yes, a term plan is valid even if the death of the insured occurs outside the country. The insured must inform the insurance company that he/she has moved outside India after purchasing the policy. There is a clause in the policy document using which the policyholder can tell that if he/she is a frequent traveller or lives abroad. However, if the policyholder is moving to countries that are considered unsafe by the insurance company, then the company can decline this facility.
- How Does the Claim Settlement Process Work, If A Person Has More Than Two Policies?
In cases as such, it is crucial to declare in the proposal form that you have a policy from any other or the same company. There is a separate column in the proposal form of every company in which buyer must fill the details of another policy. At the time of claiming the policy, your family members are required to submit the death certificate to the insurance company with which the policy has had the longest run. After that, other companies must be informed of the procedure, and the acknowledgement from the first company should be offered to them for the claim process to go smooth.
- What Are the Types of Death Not Covered in Term Insurance?
Most of the policy buyers are ignorant to the fact that “Death due to Terrorist Attacks” is not covered in term insurance. Moreover, natural calamities or anything under the “Act of God” like Tsunami/Hurricanes/Earthquakes is not covered under the policy. As the causalities in these disasters are high and the claim amount to be settled is very high, it becomes impossible for the companies to pay these amounts.
- Can an NRI Buy Term Insurance?
Yes, NRI’s can purchase a term policy, but they must be Indian residents as insurance companies need proof that the person buying policy was or is an Indian resident. An individual can buy term insurance online to avoid visiting the company office if he/she lives outside of India.
Summing everything up, you can say that there are many things you must ask for before buying a term policy. There are many do’s and don’ts that you must know, it will help you in choosing the right policy.
Yes, because she is buying a house, whether new or old, from her own house sale proceeds.
However, be aware that you, your wife and your father would have to pay tax on short-term capital gains on this transaction.
Thanks for sharing such a useful information. Term insurance is important for everyone and especially more for the bread earner of the family.
i and my wife and my mother and my father pucharse a proprtty in 2016 25% sharing each and take a home loan.in 2018 my mother sold her old proprty which she pucrhase in 2006.can my mother pucharse my share and my wife share and my father share to save capital gain
Yes, because she is buying a house, whether new or old, from her own house sale proceeds.
However, be aware that you, your wife and your father would have to pay tax on short-term capital gains on this transaction.