Availing a Term Life Insurance Plan is the first step in financial planning. You must avail this plan if you have financial dependents. Term Life Insurance takes care of your family's financial needs, when you are not around. But, you should be careful while availing a Term Life Insurance Plan, otherwise, your family will have to face the consequences while making a claim. In this blog, we will be discussing some things you need to keep in mind while availing a term life insurance plan.
You should not fail to provide all the necessary information to your insurer, while availing a term life insurance plan. If your insurer gets to know that you have provided wrong information or are hiding something from them, it will lead to rejection of claims later on. If you have the habit of smoking and drinking, inform the insurer right at the beginning. Some people stop themselves from disclosing this information, as they have to pay more premiums. But, it will be difficult for your family while making a claim.
Insurers usually conduct a medical check-up, while issuing term life insurance plans. But, some companies ask buyers to provide a declaration of good health. This can lead to problems while making a claim. In case the buyer dies early in the plan, the insurance company will try to prove that the buyer was already suffering from some disease at the time of availing the policy. There will be no such problems if the buyer undergoes a medical check-up while availing the plan. So it is advisable to avail a term life insurance plan from the insurer who conducts a medical checkup.
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It is very important to select the right tenure while availing a term life insurance plan. As term life insurance is availed to provide financial protection to your family when you are not around, it should provide cover across working life. It is advisable to take cover till the age of 60-65 years. If the insurance coverage ends when you are in the 50's, it will be difficult for you to avail a new policy at that time as it will be very costly.
Term Life Insurance is the cheapest insurance available in the market as there is no savings or investment component in it. You can buy a cover of Rs 1 Crore for a premium of just Rs 8,000 to 10,000. But, you should not just consider premium while availing a term life insurance. You must also consider the reputation of the insurer and its claim settlement ratio.
After availing a term life insurance plan, you must pay the premium amount on time to avoid the lapsing of the plan. To make sure the premium is paid on time, give an ECS mandate to your bank. In this case, the bank will pay the premium if there is enough money in your bank account. You can also give standing instruction to your credit card company to pay the premium amounts each year. You have to settle the premium amounts after the premium is paid.