Term Insurance – Frequently Asked Questions

What is a 5-year term life insurance policy?

As suggested by the name, a 5-year term life insurance policy offers you coverage for a term of 5 years. Probably the shortest kind of life insurance, these plans are a great way to keep the future of your loved ones secure, so that even if something happens to you they would not be in a financial lurch.

A 5-year term life insurance policy works quite similarly to regular term life insurance. The policyholder pays a premium that can either be a single-premium or a regularly paid premium ( paid annually, half-yearly, quarterly, or monthly) that is chosen by the policyholder.

Depending on the insurance company opted by you you can purchase the 5-year term life insurance policy online as well as offline. There are many benefits of a 5-year term insurance plan that make it worth considering.

Here are the highlights: 

    1. Death Benefit
      In case of death of the insured member during these 5 years, the death benefit is paid out to the nominee. 
    2. No Maturity
      There is usually no maturity benefit that comes with this policy and so in case the insured individual outlives the policy term, no benefit is paid out to him or the nominee.
    3. Tax Saving
      Under Section 80C, you can enjoy tax benefits. The premium that you pay towards the policy is tax exempted.
    4. Riders
      Along with the basic cover you have the option to add riders to your vanilla policy and increase the coverage, such as:

      1. Accidental Death benefit
      2. Critical Illness benefit
      3. Permanent Total or Partial Disability Rider
        However, the options vary from plan to plan.
    5. Pocket Friendly
      Though it depends on the age of the insured individual, the premiums of a 5-year term life insurance policy are quite affordable for high coverage.
    6. Eligibility
      The eligibility age for a 5-year term life insurance policy is usually of the range:

      1. Minimum entry age: 18 years
      2. Maximum entry age: 65 years

A term insurance plan provides your loved ones with financial security. Visit www.paybima.com today for an easy and simple term insurance comparison, which would allow you to make the right decision.

What kind of deaths are not covered in a term insurance plan?

When you make a purchase it is important to understand the proper use of the product/ service. This understanding becomes all the more crucial when you are planning to invest your hard-earned money in a term life insurance policy. It is through this policy that you intend to secure the financial future of your loved ones. Thus, you must know about everything that the term insurance policy covers and does not cover.

When talking about term life insurance most people feel that death under all circumstances is covered, but it isn’t so. There are certain situations under which the death benefit is not paid out to the nominee. It is important to know about such scenarios.

    1. Suicide
      If the insured individual commits suicide within 12 months of the term life insurance policy purchase, the nominee would receive 80% of the amount that has been accumulated from the paid premiums. However, after 12 months of policy purchase, most insurance companies do not pay out any death benefit in case of suicide.

    2. Self Inflicted Injuries
      A death that is caused by self-inflicted injuries is not covered under the term insurance plan.

    3. Undisclosed Pre-existing Illness
      In case of death of the insured due to a pre-existing illness that was not disclosed at the time of policy purchase, the company would not be liable to pay the death benefit to the nominee. There would surely be an investigation before the claim is paid out, if at all.

    4. Intoxication
      An accidental death when the insured was driving under the influence of an intoxicant or death due to drug/alcohol abuse would not be entitled to a death benefit.

    5. Homicide
      In case the investigations reveal that the insured was murdered and the nominee was involved, the payout would be denied.

    6. Participation in illegal activities
      When the insured dies while participating in illegal activity, the death will not be covered.

    7. Participation in Adventure Sports
      Unless specifically covered, death caused by participation in an adventure sport will not be covered.

Some insurance companies also make certain exceptions when it comes to the insured individual’s lifestyle. If you regularly consume alcohol or are a smoker, it is highly recommended that you disclose this before purchasing the policy. If you are looking for a term life insurance policy to help secure the future of your family members, visit www.paybima.com today and make a well-informed decision after a detailed term insurance comparison

Can term insurance be ported?

Portability in insurance means that as a customer you can move from one insurance provider to another without terminating the policy. You would have the right to make a transfer of the policy without having to let go of the policy benefits. However, there is no porting benefit in life insurance plans in India yet.

Term life insurance plans are considered to be the foundation of a good financial plan. Insurance companies offer various benefits and services to their customers, and most individuals select a plan after a detailed term insurance comparison. However, sometimes it may happen that after making the purchase you realize that some other company is offering better options or maybe you are not completely satisfied with the existing insurer. 

So far, the Insurance Regulatory and Development Authority of India allows portability only in motor and health insurance and not in term life insurance. Discussions have been initiated by the IRDAI to bring term insurance under portability as well, in order to encourage healthy competition and transparency. Portability allows a customer to switch to a different insurer easily. 

However, you can always opt for another term life insurance plan to enhance your coverage. If you are thinking of purchasing a term life insurance policy, make sure you first visit www.paybima.com and learn about all the elements involved. 

Can we switch term insurance at any time?

Life insurance offers certain adjustments that can be made in the plan details such as sum assured, the premium amount, and the period of premium payment. However, in the case of term life insurance such modifications are not possible. You can neither change the specifications of your term insurance plan nor port it to some other insurance provider.

As per the guidelines of the Insurance Regulatory and Development Authority of India, porting is allowed only in health and motor insurance. No such option is available in term life insurance, thus it is highly recommended that you make a well-informed decision before you take the plunge. Lapsing your term plan would leave you without any coverage and that is not recommended. 

However, you can opt for a separate term life insurance plan if you wish to enhance your policy and once that is issued, you can choose to discontinue your previous plan. However, do remember that your premium would rise since your age would have increased. If you wish to purchase an additional term life insurance policy, please do visit www.paybima.com and along with the guidance from our insurance experts, make the best decision. 

How can I increase my existing term insurance?

When you purchase a term insurance plan, you wish to safeguard the future of your family in case of an unfortunate accident. With the insurance, you can ensure that tomorrow even if something happens to you your loved ones would not be in a financial crunch. If you are the primary bread earner in the family, having adequate coverage becomes crucial. However, there are times when you feel that the cover that you have may no longer be enough to support your family’s growing needs. Under such circumstances, you have the following options. 

  • Upgrading to a new policy
    You can simply purchase a new term insurance policy. That way you can increase the coverage manifold. However, you would have to go through the entire procedure of buying a new policy.

    If you wish to go for a plan that offers a simpler and quicker application procedure you can visit www.paybima.com. Paybima not only allows you to do a term insurance comparison but also lets you buy a term life insurance policy quickly.

  • Opting for Life-Stage Increment Plan
    Many companies offer a special component that looks after your growing needs such as marriage and childbirth. So, under this option, you can increase or enhance your coverage, up to a certain specified amount in case any of the specified events occur.

  • Increasing Term Insurance
    One of the best alternatives is to purchase a term life insurance policy that comes with an increasing life insurance cover. In this plan, the cover automatically keeps increasing every year by a certain fixed percentage and is usually capped at 2 times the initial sum assured.

  • Riders
    For added protection and extra coverages, another easy way is to opt for add-ons/ riders along with your standard term insurance plan. Here are some of the popular riders that you can opt for:
  • Critical Illness Rider
    In case the insured individual is diagnosed with any of the listed illnesses, a lump sum amount is paid out to him.
  • Accidental Death Rider
    In case of accidental death, the accidental death rider benefit is paid out to the nominee over and above the term insurance sum assured.
  • Waiver of Premium
    In this rider, if the life insured dies within the policy tenure, the policy continues without any further premium payment and the maturity or survival benefits are paid out as per schedule. This kind of plan is usually beneficial for child plans.

These are some of the ways to enhance your existing term insurance coverage.

What should be the duration of term insurance?

A term insurance plan has two main features, one of them is your cover amount and the other one is the duration of your plan. According to financial experts, the duration of your term life insurance shall be more than you think you would need. This is because life is full of uncertainties and a longer tenure can be useful.

However, this should not be mistaken as a suggestion for taking the maximum duration available as it would demand high premiums (due to inflation) and can cause a financial crunch in your present life. Also, after a certain age, you may feel that you are less burdened by your family responsibilities and have fulfilled your financial goals.

So, if you are wondering what should be the duration of your term insurance plan, here are some points that you must consider:

  • Your Financial Goals:
    Whenever you make any investment you always have a goal and a timeline planned to achieve the same. Well, you can use these timelines to frame your term insurance plan tenure so that your family’s dreams are never left unfulfilled even if you are not there with them.

  • Your Age:
    The age at which you buy a term insurance plan affects your policy term a lot. Insurance companies offer a longer-term to people who are young and vice versa. Therefore it is advised to invest in term life insurance as soon as you start earning.

  • Consider your debts and liabilities:
    Before deciding on your term insurance plan duration you must also consider your debts and liabilities. Experts advise that your duration should be more than or equal to your balance EMI duration so that your family is never financially burdened in your absence.

  • Your dependents:
    Ideally, a term plan should be taken as long as you are financially responsible for your dependents so that if you happen to die, your dependents are not under financial stress. 

While choosing the right duration of your term insurance plan may seem to be difficult, it really doesn’t have to be. Keeping the above pointers in mind will help you in chalking out a proper plan. Visit www.paybima.com for more expert guidance on term insurance. 

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