TERM INSURANCE

Any adult who has a family needs a term life insurance plan. The people who shoulder the responsibility of their family require the protection of a term plan all the more. A term life insurance is specifically conceptualised to offer financial assistance to you and your family. In this type of insurance policy, the sum assured is offered to the family or dependents of the policyholder, thereby helping them in managing finances after the primary earner passes away.

If you want a high sum assured in lower term insurance premiums in order to create sufficient financial corpus for your family in your absence, then a Term Insurance plan is the best type of life insurance policy for you. The term insurance plan is the most economical way to insure the most important years of your life. Some insurance companies also provide accidental death benefit rider under which, the additional amount is paid by the insurer in case of death due to an accident. Moreover, you can avail of tax exemptions on the term insurance premium paid under the Income Tax Act.

Term Life Insurance is a type of life insurance only. It offers life cover in exchange for a particular premium over a specific tenure. In case the policyholder passes away during the term of the policy, the appointed nominee will receive the death benefit. There is no maturity benefit in a term plan. Life insurance and a term plan comparison will help you understand the details of the two.

The term insurance premium depends on the age at which the policy is bought by the insured person. If you buy online term insurance at an early age, the premium would be lower. Moreover, you would be able to avail coverage from an early age and create financial security for your family without any delay. So, compare online term plan and buy early.

Also, since you are buying the plan young, you would be free from medical complications and thus the policy would be issued instantly and at affordable premiums. Lastly, you would also be able to lower your tax liability as the premiums that you pay would be allowed as a tax-free deduction from your income. Do a term policy comparison to help you pick the best plan.

There are numerous life insurance companies and each has a variety of online term insurance plans available with them. Hence it becomes necessary to, first, do a term plan comparison of all the products available in the market and select the one that best suits your requirements. This is where PayBima comes into the picture as it allows you to do an online term insurance policy comparison. You just have to enter few details about yourself and the amount of coverage you need and PayBima will show you a list of term life insurance quotes from the leading insurers allowing you to compare term policy online.

You can browse through all the plans, compare online term plans on their benefits and features, add riders available from the insurer and then shortlist the one which you think fulfils your needs the most. You can then fill up the proposal form, submit relevant documents and make payment.

Your policy will be generated post medical tests if necessary and the policy copy will be sent to your registered email.

When you compare term insurance plans online, you must compare these parameters:

• The coverage that is being offered under different plans
• The term insurance premium that you would have to pay
• The reputation that the insurance company carries is a very important factor
• Go through the claim settlement ratio of the company too. A consistent and good ratio determines that they will not wrongly reject your family’s claims.
• The add-ons options offered by the company, the more the better

Selecting the correct tenure of your term life insurance is as important as the amount of cover you opt for. The longer tenure you choose, the higher will be the premium amount. While buying a term insurance plan, basically you are intending to cover the important years of your life, i.e., when you are earning. Hence it is mostly recommended to take life cover till your planned retirement age. By then, all your major expenses like a child’s education and marriage, building a house etc are mostly taken care of.

As an online term insurance plan is the most affordable life insurance plan, you can opt for a high sum assured at pay low premiums for it. For e.g. premium for a one crore term insurance cover can start from Rs 500 per month. Such large covers can compensate for expenses like outstanding home loans in case of death and protect your family from a huge financial burden. The best part is that your premium will remain fixed throughout the tenure of your policy.

The amount of term life insurance coverage depends on a number of factors like your annual income, existing liabilities, inflation etc. Ideally, your term insurance coverage should be at least 10 to 15 times your annual income. This will make sure that in case of untimely demise, your expenses for the next 10-15 years will be taken care of by the lumpsum pay-out. So, when you compare term insurance plans online, it is always recommended to have sufficient term insurance cover so that your family’s financial security remain unaffected after you.

Some insurance companies offer the feature of Premium Waiver upon the Diagnosis of Terminal Illness. This means that if you are diagnosed with a terminal illness and cannot pay your future premiums, the company will do it for you. Your term insurance policy will continue till maturity.

While determining the premium amount of your term plan, the insurance company considers the following factors:

Age

Your age is the number one factor for calculating the premium for term insurance cover. Younger policyholders pay lesser premiums. As you age, the premium increases since the likelihood of pay-out by the insurance company also increase. However, once you have bought a term insurance plan, your premium remains fixed throughout the policy period.

Tenure

Another important factor that decides your term insurance premium amount. The longer the duration, the higher is the premium outflow. For e.g. a person opting for a 30-year policy has a higher probability to die in the policy period compared to a person opting for a 10-year policy. Hence, he has to pay a higher premium.

Gender:

Gender also plays a role in determining your premium. The life expectancy of women is more than men and pose a lesser risk of a claim. Hence, they may pay a lesser premium than men for the same life insurance cover.

Lifestyle

Your lifestyle can reflect in understanding your risk profile. People with smoking and drinking habits have to pay higher insurance premiums as they are more likely to suffer from a life-threatening disease

Premium payment frequency:

How you choose to make payment also plays a role in your total premium outflow. The insurance company charges a higher premium if you have selected to pay the premium on a quarterly, semi-annually or monthly basis.

If you feel the need, you can invest in multiple term insurance plans. However, you need to disclose your premium policy details while opting for a new one, so that the underwriters consider all the term insurance plans and their existing coverage before issuing you the fresh plan.

Each insurer has its own pre-policy medical grid. Depending on factors like the sum assured you opt for, your risk profile, age and medical history, the insurance company may tell you to undergo a medical check-up. However, in most cases, if the age is less and for a low sum assured, a questionnaire will be sufficient.

A nominee is a person chosen by the policyholder. He/she will receive the term insurance policy money in case of a death claim. While appointing a nominee, the policyholder details like name, address, age and relationship with the nominee.

Yes, nominee details can be changed later by filling up a nomination form and submitting it to the insurance company before the policy tenure is over or a death claim is made.

Term life insurance claim should be filed at the earliest so that the settlement is received easily and quickly. There is no specific time limit to file a term insurance claim. However, in case of delay in filing the claim, the insurance company might get suspicious about the reason for the delay and there might be investigations into the claim. This would delay the payment of claims.

The term ‘underwriting’ is used to describe the consideration that is given to an application for an insurance policy. In simple words, when you apply for an insurance policy the insurance company evaluates if you should get the insurance cover or not. The company would like to ensure that you are not a risk. The company would go through your medical as well as financial history and only then approve your application.

Yes, you can claim from two or more term insurance policies without any problem. You would receive the full claim amount from both policies irrespective of the amount already received under one policy.

Some of the most common reasons for rejection of term insurance claim are as follows:

Non-disclosure or misrepresentation of material facts:

Hiding or giving inaccurate information about your health history, smoking habit or any pre-existing ailment while filling up the application form is considered misrepresentation and can become a basis for claim rejection

Lapsed Policy:

If you do not pay your premiums on time, your term insurance policy will lapse and your claim intimation could be rejected

Exclusions

If the reason for death is not covered under the term insurance policy, your claim will be rejected. For e.g. suicides are covered only after one year of the policy period. Similarly, death due to drug overdose or participating in hazardous activities like war are mostly excluded and not covered in the policy.

Unable to provide relevant documents/proof:

If nominee details are not provided or you failed to update correct information about the nominee, your claim might get delayed or rejected as per the company policy

Early Death Claim:

If you die within the first 2 policy years, the insurer would investigate to check if you had disclosed all relevant information at the time of policy inception before passing the claim. However, if there is a case of non-disclosure or misrepresentation of material facts found, then the claim can be rejected also. However, if the case is found to be genuine, the claim will be settled.

As per IRDAI guidelines, a life insurance company has to process a claim settlement within 30 days of receipt of the claim form and all relevant documents. If any additional documents are needed for verification, the entire settlement process cannot exceed 6 months. Post this, the company has to start paying interest on the claim amount.