Term Insurance plan is the best Insurance you could have for your life coverage with minimal premiums and maximum coverage. As already discussed Insurance is like an agreement where customers like you and me will pay a premium and the company will cover us for that period in event of any mishap with us, providing the nominee with Pre decided monetary benefits. Insurance provides coverage for life and it is highly recommended to have.
If your need is just to have life insurance, it would be recommended to go for Term Insurance plans. As it is the purest form of Insurance and fulfills all your needs for life insurance. There are many insurance plans available in the market, but you should have five insurance with you for the protection of your life like Life, Motor, Term Insurance, etc. You should check whether the insurance discussed is meeting your requirements are not.
Important Things you must know about Term Insurance
Once you make your mind go for term insurance there is some important information you must know:
You cannot surrender
It simply means that you will not receive any money once your policy gets ended or matured which happens only after the completion of a stipulated time. Also, you will not get any money back when you surrender your policy midway. Because as already discussed in term insurance that there is no cash value attached to the term insurance and, it only carries the insurance component with it. In the case of life insurance, part of your premium is kept separate by the company which you will get in case of surrendering the policy. Amount kept aside will be provided to you after deducting the penalties for surrendering the policy, as you are breaking the agreement.
No amount at maturity
When your term insurance plans with the company get over, the company is not liable to pay back anything. This is the reason why generally customers try to avoid term insurance. But if you do a holistic comparison between term insurance and life insurance, you can easily conclude that premium for term insurance is very minimal for the same coverage amount. So, if invested wisely the remaining part of the premium can earn a greater return for you than life insurance.
Appoint the Nominee carefully
As insurance companies are liable to pay all the maturity benefits to the nominee only, you must choose the nominee carefully. The condition of your family is subject to change and accordingly, these changes must be recorded in the policy for desired benefits. Information about the nominee should be updated in case of divorce or remarriage, as the company is liable to pay the registered nominee only. So it’s better to keep updating the information of nominees regularly with the company.
Don’t make Children a Nominee
If you are thinking to appoint your children as a nominee in your policy then wait. It’s good that you are thinking about their bright future, but will it serve your intended purpose? Because Children are legally not liable to get benefits in case of a mishap with you till the age of adulthood. The age of adulthood may vary from state to state and as per the law.
Till the time your child becomes an adult, children need a guardian to take care of them as per the legal system in the country. The Guardian of your children can exploit this very law or process and you would have come across the same thing in many of the movies as well. So it becomes critical to ensure that no child should be appointed as a nominee. Alternatively, you can form a trust which will act as per your wish and will receive the monetary benefits too.
Change in the Existing Policy
It is sometimes possible for you to convert your term policy into a permanent policy. But you will get time to complete this process and after this time period, you will not be able to do the same. That means it is possible to change the policy only in that time window after the initiation of the policy. Because of the change in your financial and health condition, you may think of changing the existing policy.
Blogs to understand the concepts better:
The last thing you must keep in mind while planning for insurance is that you must read all Terms and conditions for particular insurance carefully like Important benefits are delivered by the company to consumers or not. Rules and regulations are decided by the government and all companies must adhere to these rules made by the IRDAI, and you can also go through the official website of IRDAI for information like companies engaged in this business and all. The points discussed above are worth knowing and understanding for a better experience with the insurance companies and to avoid any further delay in claim processes.