A major advantage of buying a term policy is the death benefit offered to the nominee upon the policyholder’s death. No monetary benefits are granted at the time of maturity if the policyholder survives the tenure of the term insurance. As a result, people have a lot of apprehension about buying a term insurance plan.
Below discussed are 5 common questions that people have when thinking about buying an online term plan.
Q1. Why Do We Need Term Insurance Plan?
Just like any life insurance policy, a term insurance plan offers life insurance coverage. However, the main USP of a term insurance plan is the death benefit offered. A term policy is only valid for a pre-decided “term”. The provisions under this policy are made in such a way that if the policyholder dies during the decided term, his/her nominee gets a lump sum amount in the form of a sum assured.
The main reason why people opt for a term insurance plan is because these policies charge much less premium as compared to traditional insurance policies. People with limited finances to spare for their insurance plans or who are the sole breadwinners of their family can create a safety net for their family members under this insurance scheme.
Q2. How Does One Decide On The Tenure Of The Term Insurance Plan?
The tenure of your term insurance plan is decided based on at what age you buy your policy. Similarly, other factors such as your health, gender, lifestyle and annual income also play a key role in deciding on your insurance tenure. Thus, if you buy a term insurance plan in your 20s or 30s, and assuming you are in a good space, both physically and financially, you can enjoy a long tenure of 50-60 years on your term insurance plan. The more delay you make on buying a term insurance, shorter would be the tenure on your term insurance.
Q3. What Are The Types Of Deaths Covered And Not Covered Under A Term Insurance Plan?
Any death that is a result of natural causes, accidents or due to any critical illness, is covered under a term insurance plan. However, there are certain exceptions under this cover. For example, death due to suicide, because of any sexually transmitted disease, or self-inflicted injuries is not covered under a term insurance plan.
Similarly, accidental deaths while being under the influence of any intoxicant like alcohol or drugs or death caused due to any natural calamity like earthquake, floods, or tsunami cannot be claimed to get a sum assured under a term insurance plan.
Q4. What Riders Are Offered Under A Term Insurance Plan?
Some insurance providers offer certain riders under their plan that offer additional term insurance benefits. Example of some common riders include
- Critical illness rider
- Accidental death and dismemberment rider
- Partial/Total disability rider
- Accelerated sum assured rider
Q5. What If A Policyholder Survives the Tenure of The Term Insurance Plan?
As is with any insurance plan, upon the end of the tenure on your term insurance, the policy will terminate. However, unlike traditional insurance policies, a policyholder does not get to enjoy any monetary benefits upon the insurance’s maturity. In fact, the basic idea behind a term insurance plan is that it provides a death benefit to the nominee if the policyholder dies during the insurance tenure.
However, there are some insurance providers that grant survival bonuses. These bonuses could be either in the form of monetary gains or waivers on premium amount upon the renewal of a term insurance policy.