Ways to improve Experience with Term Insurance plans
Term Insurance plans are the best part of any Insurance you could have for your life coverage with minimal premium and maximum coverage and related benefits to your nominee. Already discussed in another blog on Insurance that it is like an agreement where customers like you and me will pay a premium and company will cover us for that period and in event of any mishap with us, provides the nominee with Pre decided monetary benefits. Insurance caters to the coverage of the life and it is highly recommended to have one with you.
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 all the other insurance in the market available are comprised of Insurance plus Investment components in it. There are many insurance plans available in the market, but you should have five insurance with you for protection to your life like Life, Motor, Term Insurance, etc.
You should check your requirements and whether the insurance discussed is meeting your requirements are not. Once you make your mind go for term insurance there is some important information you must know:
You cannot encash it
Simply means that whenever you surrender your term insurance plans or after maturity of the policy, you are not going to get any amount in cash as you are liable in case of life insurance. Because there is no cash value attached to term insurance and as already discussed, it only carries the insurance component with it. In case of life insurance, part of your premium is kept in cash wallet in the same policy which you will get in case of surrendering the policy. Amount saved in cash wallet 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 which you would have got in case of other insurances. This is the main point where generally customers try to skip the idea of having 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 premium can earn a greater return for you than life insurance gives you at maturity.
Appoint the Nominee carefully
As insurance companies are liable to pay all the maturity benefits to the nominee only, you must choose nominee carefully. Condition of your family is subjected to change and accordingly change must be reflected in the policy for desired benefits. Information on nominee should be continuously updated in case of divorce or remarriage, as the company is going to pay the registered nominee only. So it’s better to keep updating the information of nominee regularly with the company.
Making Children as Nominee is strictly No
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 the intended purpose of yours. Because Children’s are legally not liable to get benefits in case of a mishap with you till the age of adulthood. Age of adulthood may vary from state to state and as per the law.
Till the attainment of the age of adultery, children need a guardian to take care of them as per the legal system in the country. Guardian you never know can exploit this very law or process and you would have come across the same thing in many of the movies as well (on a lighter note). 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 of existing policy
It is sometimes possible for you to convert your term policy into a permanent policy. It is like a back door entry where you are facilitated with this conversion process, but it actually acts as a window of time. That means it is possible to change the policy only in that time window after initiation of the policy. But why to change the policy and its answer maybe because of the change in the financial and health condition of yours is present. Conversion is quite ok but you must know the fees for the conversion of policy beforehand, as sometimes these fees can be uneconomical to proceed further.
Last thing you must keep in mind while planning for an insurance that you must read all Terms and conditions for particular insurances carefully. Some important benefits are deleivered by the company to consumeres or not? Rules and regulation are decided by government and all companies must adhere to these rules made by the IRDAI, and you can also go through the official website of IRDAI fo information like companies engaged in this buisness and all.
The points discussed above are worth knowing and understand for a better experience with the insurance companies and to avoid any further delay in claim processes.