Frequently Asked Questions
Most Commonly Asked Questions about Term Insurance Answered
Term plans are a highly economical form of insurance. This is a life product that
offers pure protection, designed to create security against unanticipated adverse
circumstances. Here are few common clarifications on this type of policy.
The Indian Insurance QuizHere’s a simple quiz to check your basic knowledge of what a life insurance company in India offers the consumer: |
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1. How to Select the Policy Tenure?
The ideal policy should cover you and your family up till retirement; and can extend
to a few years after that. Remember,
the aim of a term plan is to cover against
risk of income loss . So, a term beyond retirement might be a financial burden because
you still need to pay the premiums. Also, take into account that higher terms attract
higher premiums.
2. What happens if you terminate your policy before the end of its tenure?
3. Where can I Find the Claim Ratio of an Insurance Company?
In India, the Insurance Regulatory and Development Authority (IRDA) publishes an
annual report. This gives a detailed claim ratio analysis and the claim status of
different companies.
4. Are all Types of Death Covered under the Policy?
No. Suicidal death of the insured during the first year of cover is a major exclusion.
Other such common omissions are self inflicted injuries and involvement in adventure
sports. Some recent term plans come with terrorism cover as well.
5. Can Term Life Insurance be bought by an NRI?
Yes, NRIs are eligible for term plans. However, not all insurers off such cover.
So, always clarify eligibility before applying for a plan.
6. Is there a Difference between Term and Endowment Plans?
Term plans offers pure risk coverage and is one of the cheapest forms of life cover.
It is a necessity for those who have dependants or any impending debt clearance
that relies solely on their income. If you survive the tenure of the policy, no
sum assured is paid. However, you can always add a maturity rider.
Endowment and whole life insurance, on the other hand, act as both life insurance and an investment option. You need to pay regular premiums in order to build a substantial corpus. You can use this amount to fuel major financial expenses on the maturity of the policy. |
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