Buying term insurance can be confusing for people who are new to the industry. There are several features that should be considered before you spend money on it. Being an educated consumer will help you get the most for your money.
Term insurance is a life insurance policy that covers a set time period. If the time period expires before the covered person dies, the nominee receives the benefit from the policy. These are wise plans to buy as they provide death benefits, and the money is paid even if the person in the policy has not yet died. There are several things you should know about these insurance policies.
Key Things You Should Know Before Buying A Term Insurance
1. How old do you have to be to get a term policy?
If you want to buy a term policy, most companies require customers to be between the ages of 18 and 65. Check with your insurance agent to be sure you fit within their age range.
2. Can I end my policy before the time period expires?
If you can no longer afford the policy, you can end it before it reaches maturity. Communicate with your agent before you make a choice, as you might have other options that cost less rupees. If you do decide to end your policy before maturation, you will most likely have to pay a penalty. The penalties might be waived if you have had the policy for a preset time period.
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3. Can smokers be insured?
Term policies do cover people who smoke and chew tobacco. They also cover people who drink alcohol. Your agent can show you the different policy prices for smokers and non-smokers, as well as drinkers and non-drinkers. Usually, the non-smoking and non-drinking people have lower premiums.
4. What is a term rider?
In the world of insurance, riders are add-ons to plans. They are only necessary if you have something special that needs to be covered. For example, if you drive a large truck for a living, you might want a rider that covers you if you are in a fatal accident while on the road. Some riders are designed for critical illnesses or disabilities either partial or permanent.
5. How does my health and my family’s health affect the policy?
Your health and your family’s health will affect the price of your policy. You should not hide health information, because you could have problems with the company rejecting claims for hidden information. Insurance policies are legal documents, so you should be honest. Your family health history is also important, especially if your family has a history of chronic problems, like diabetes or heart disease.
6. Why should you buy a substantial policy?
Many Indians are underinsured and will usually get 1 lac or less. If you want your beneficiary to get more than that, you need a policy that is not cheap. Your policy should be for more than 1 crore. The best way to figure out how much your beneficiary will need is to plan to pay up to 300 times your monthly expenses, plus a little extra so your family can live a comfortable life.