Term Plan: All Questions About a Term Plan Answered
27 June, 2022 | Vaishali Sharma
All investments have their terms and risks, which an investor should know well in advance. Knowing these will help them know whether to choose the investment or not. It will also help them compare ...
All investments have their terms and risks, which an investor should know well in advance. Knowing these will help them know whether to choose the investment or not. It will also help them compare various plans according to their returns and risk factor. The same is the case in a term plan, as the potential customer must first clarify all their doubts on the plan to avoid any troubles moving forward. If you plan to buy a particular term plan, it is natural to have a few questions in mind regarding the policy. They will help you know what the plan provides and at what cost. So read on to know the solutions to a few commonly asked questions regarding a term plan.
What Is Term Insurance?
Term insurance is the most basic type of life insurance, with rules defined by the governing authority, IRDAI. So even if these products are available under an insurer’s name, its policy terms and conditions and rules are as per the guidelines of IRDAI. The major outcome of these plans are they provide a higher death benefit in return for a comparatively lower premium amount. There are many factors behind this high rate of return that the nominee gets. Among them is the lack of a moneyback policy and the maximum coverage age of up to 70 years. However, some term plans do provide a return of premium. But such a term plan with return of premium might have links with market-dependent securities.
What Are the Features of Term Insurance?
One of the most important features of the best term insurance plan will be its low premium amount. Most term plans are for the benefit of people with limited resources to divert towards life insurance. That is why the premium amount is so low. Also, there are no extra exclusions in the plan, which ensures high claim approval chances. Another attractive feature seen in any best term insurance plan is its tax savings. Even though there are no direct monetary benefits, such as a return of premium, these plans provide the maximum benefits in income tax. You can claim a tax deduction of up to INR 1,50,000 under a term plan every financial year.
Let’s answer a few common questions on term plan:
Which kinds of deaths does a term plan not cover?
The only exclusion in term plans is death due to suicide. So suicides are not covered under a term plan. Also, there is a waiting period in the policy, which is the initial 45 days from the commencement of the policy. During this waiting period, all reasons for death, other than an accident, do not have coverage. And the nominee will not get any death benefit.
Do you get your money back at the end of a term plan?
No. The term plan does not have a money-back policy, so you do not get your money back at the end of a term plan.
Is a post-mortem compulsory for a term plan?
Yes. For reasons of death other than accidents, a post-mortem is compulsory for a term plan.
Can I have two term insurance plans?
Yes. You can have two term insurance plans at the same time. Not only two, but there are also no limitations on the number of policies you can hold at a time.
What happens if the nominee dies in the term plan?
If the nominee dies while the policyholder is alive, then the policyholder has to change the nominee’s name in the policy. Any failure to do so will void the policy when the policyholder dies, and there is no living nominee. And in case the nominee dies after the death of the policyholder, but before receiving the death benefit, the death benefit will go to the policyholders’ legal heirs.
Is income proof mandatory in the term plan?
Yes. Income proof is mandatory in the term plan, especially if you plan on claiming relaxations in the ITR against term plan premium payments.
Knowing the answer to these important questions will help you understand what a term plan can provide. You will also learn the liabilities and exclusions of the plan. It will prepare you well in advance about the policy terms rather than coming as a surprise while facing rejection to a claim. By knowing the common rejection causes, you can make arrangements for those specific occasions and leave the rest to your term plan.
You can also take several steps to decrease such rejection of claims. And one such step is to choose an insurer with the highest claim approval ratio. Max Life Insurance is a major insurance provider in India, with a high claim settlement ratio of 99.35%. This high percentage substantially increases your chances of claim approval. So, visit Max Life Insurance’s official website today to know more about their best term insurance plan.
Author Bio: Vinod Gill is a writer who specializes in writing content on Finance and Banking subjects. He is a Digital Marketing Consultant, Blogger, and Co-Founder of Ecompany.