4 things to reflect upon before and after buying a Term Insurance

Term Insurance can be considered as the cheapest form of insurance that can take care of the liabilities and responsibilities in case of your sudden demise. While the life cover should be big enough to encompass the outstanding liabilities and future goals, one should also check the right boxes when it comes to choosing the other aspects of the policy.

Here is a list of some pivotal things to keep in mind when you buy term insurance plan.

1. Being the cheapest form of life insurance, pure term has no investment component. For a premium of?8000 -?10000 a year, you can buy a cover of up to 1 crore. When you choose to buy a term plan, don’t let the low premium alone be the deciding factor as it is more important to buy a policy that has a good reputation in claim settlement and healthy record of customer orientation. At the end, you should be sure that your family will get the claim after you are gone.
2. After you have bought a term plan, it is important that you don’t lapse it by missing the renewal premium. Best way to ensure that the premium payment is made on time is to give an ECS mandate to the bank. Even if you don’t remember to make the payment, your bank will pay the premium amount. Another option is to give standing instruction to your credit card issuer to make the payment when it is due every year. Most of the companies give option to pay premium monthly, quarterly, half-yearly or annually. You can opt for annual premium option to reduce the chances of you missing the premium payment if you are doing it yourself.

3. Since term insurance plans are high-value covers, companies generally put buyers through extensive medical tests while issuing them a policy. In some cases, if a company does not insist on a medical test but merely requests the buyer to provide a declaration of good health, it might work against you as a buyer. When the buyer goes through a medical examination, the responsibility shifts to the company and the doctor who has performed the tests. As a rule of thumb, insist on performing a full medical test to make sure that the insurer does not deny the claim.

1. The contract with the insurance company is based on the principle of good faith and it becomes null and void if the company finds that the policy holder has given incorrect details in the application form. The premium amount for non-smokers and teetotalers is relatively low but don’t get tempted to tick ‘No’ in the form when you apply. Concealment of lifestyle habits and medical conditions may lead to rejection of claim.
2. Unless it is specifically mentioned, premium of a term insurance remains the same throughout the term of the policy. However, if the policy holder declares any disability or any life-threatening habit such as smoking/drinking, the company might apply for a premium raise and the amount would change henceforth.

Term Insurance can be considered as the cheapest form of insurance that can take care of the liabilities and responsibilities in case of your sudden demise.