Everyone has a rudimentary understanding of what term insurance is. However, in addition to the usual advantages and characteristics of the term plan, there are a few more that many of us are unaware of.
To avoid adopting a term plan that does not match all of your expectations entirely, you must make some effort to learn more about the plan. Remember that there are several insurance firms, and each has a variety of term insurance policies to offer.
Each plan will have its own set of features and perks. At the same time, although the plans may seem to be comparable among insurance providers, they will almost definitely vary. As a result, you must take sufficient precautions to understand a term plan before enrolling in it fully.
Here are some lesser-known facts regarding term insurance policies that may help you make an informed selection.
1. Term plan is not only for earners of the family
Many individuals also believe that term plans are just for family earners and that non-earners do not need or cannot possess a term plan. A term plan may be held in the name of any family member, including elderly parents, homemakers, and other family members who do not have a source of income.
However, they should never fail to pay the premium for any reason since this may result in the insurance lapse, and the premium you paid up to that point may be lost. Try out our term insurance premium calculator.
2. You can increase the coverage amount after purchase
Financial goals may change as you go through life stages due to various variables. For example, if you get life insurance while married but have no children, the insured amount will cover your partner’s requirements. There are additional tasks to handle if you have children.
Don’t forget to calculate your premiums with the help of the term insurance premium calculator.
To meet such evolving demands, insurers provide growing term insurance. You may change your life insurance coverage at regular periods under these policies if you feel the need. If you do not have to expand term insurance, you may cover the changing circumstances with a new policy or, if available, a top-up option.
3. False disclosure may affect your claims
Many persons who are attempting to increase their claim amounts give fake information. However, providing inaccurate information while purchasing a term plan may result in a claim denial, solely affecting your family members.
As a result, before purchasing a term plan, you should strive to provide all information about yourself, such as if you use cigarettes, smoke, or have a family history of illnesses and other life-threatening conditions such as diabetes and heart disease.
4. Sum assured 20 times of your income
To offer total security to your family, the amount assured you want to pick should be at least 15 to 20 times your present salary. This is primarily due to inflationary forces, which may lower the value of money and raise the cost of living over time.
However, any ordinary insurance plan may raise your premium amount for a more significant sum than promised. However, in the event of a term plan, you may still choose a bigger sum guaranteed with a lesser premium that fits within your budget.
5. Term Insurance Plans are Flexible
One of the misconceptions regarding term insurance is that it is not adaptable to diverse financial needs. The fact is that you may tailor term insurance to your specific requirements by adding riders to the basic plan. Several riders are available with a term insurance plan to expand coverage as desired.
Critical illness insurance, a waiver of premium rider, an accidental death and dismemberment rider, and other typical riders are available with term insurance. Calculating the amount by using a term insurance premium calculator guaranteed for your term insurance can help you assess if you need an appropriate rider for your policy.
6. Real life insurance
Several insurance plans are available, including ULIPs, money-back plans, endowment plans, and many more. These are, however, generally investment-type insurance programs. Although they give some guaranteed life insurance, they do not provide the same level of protection as a pure life plan.
In the event of a pure term plan, you might expect to get a large amount promised or pick your own sum assured for the term period. Furthermore, the premium amount is lower compared to the investment plan.
7. Sum assured can be increased during the term period
The majority of them are unaware that the amount insured may be enhanced while the policy is in force. As a result of this lack of awareness, many people purchase new term insurance and squander their money. Instead, you have the option to increase your sum guaranteed value while the term plan is active. However, your premium may climb somewhat depending on the amount guaranteed that you are likely to increase.
8. Most uncomplicated life insurance product
A term life insurance policy is the only kind of life insurance that has no onerous clauses or unclear terms and conditions. By paying low term plan premiums, you may provide your family with comprehensive life insurance that will cover high costs such as a foreign trip, a holiday house, or even pay off outstanding debts!
9. Types of term plans
One of the term life insurance facts is that you should be informed of the many sorts of term insurance policies accessible. Many of us are unaware of the many available plans. There are plans such as level premium term plan, return of premium term plan, assured issue term plan, and final expense term plan to give you an idea.
10. This is a contract
Remember that a term life insurance policy is a contract between you and the insurance company to pay your beneficiaries a certain sum of money in the event of your death. However, in exchange for this advantage, you agree to pay the premium during the term time, even if you get no return on your investment.
Wrapping It Up
So, before choosing a term, you should have a good understanding of term insurance policies. You should better understand the prevalent facts and fallacies surrounding the word plan and its significance with all of this information.
It is always advisable to be cautious while making crucial financial choices. It is about safeguarding your family through tough times when you will be unavailable. As a result, it is reasonable that you may have concerns about purchasing insurance.
Calculate your cover amount using our term insurance premium calculator!
