There are various doubts faced by customers when it comes to buying a term insurance plan. They get unsure about how claim settlement would work in case they have more than one term insurance policy. Some are confused, whether or not they would get cover outside India. There are some who worry about the validity of their policy if they contract some critical illness or start smoking after purchasing insurance. These are some of the many questions that crop in our mind when we have to purchase a term plan.
All the doubts and queries must be cleared prior to buying a term insurance. Which is why, all of the above stated questions and a few more have been answered here, so that your buy is devoid of any confusions and suspicions.
Your premium is decided on age at which you buy the policy and remains same, throughout your life
Premiums can increase between 4-8% each year after your Birthday
Your policy application could be rejected or premiums increase by 50-100%, if you develop a lifestyle disease
7. How does claim settlement work if a person has more than two policies?
In such cases, it is primarily important to declare in the proposal form that you already possess a policy from an ABC company. (There is a separate column in every company’s proposal form, which a client has to fill if he has another policy from the same or a different insurer). The form should be submitted after providing such necessary information. Then at the time of claiming the policy, the general practice must be to submit the Death Certificate to that insurance company with which the policy has been running for the longest time. After wards, other companies must be informed of the procedure due and an acknowledgment from the FIRST Company should be offered to them and then accepted by other companies.
However, lately, it has been observed that majority of insurance companies do not ask for an original death certificate to settle the claims; a photocopy of the certificate works well too. So be vigilant while filling the form and provide all the information about your previous policies to prevent even a minor problem later on.
8. How good are Insurance companies in investigating death?
There is a distinction between early claim and normal claim. If a claim happens within the first two years of purchasing the policy (This period is different for every insurer), the company does thorough investigation before settling the claim. It is essential as for the company too much is at stake. For e.g, if someone has taken a sum assured of Rs 50 lakh and pays Rs 7,000 annually (if he has taken this policy on a per month basis, he pays around Rs 600 monthly), then the company has a lot to lose. Hence, the company will doubly verify everything before settling the claim. In normal claim, premiums are paid periodically and the policy is in force for a long period, say 12 to 15 years. In these cases, getting a claim is easy.
9. What are the deaths that term insurance does not cover?
Many of the buyers are ignorant about the fact that “Deaths due to Terrorist Attacks” are not covered under term insurance. Such term insurance claims may get settled on humanitarian grounds later on when the nominee contacts the Insurance Regulatory and Development Authority (IRDA) but the clause is excluded in most companies. Another thing, Natural calamities or act of God like earthquake/tsunami aren't covered either. As in such disasters, casualty is high and the claim to be settled runs in hundreds of thousands of rupees which is impossible to settle by the company at once. Therefore, one must remember to clear these facts while buying a term insurance.
10. Are NRI’s allowed to buy Term Insurance?
Yes, NRI's can purchase term insurance plan but they need to be a resident of India as the insurance company requires certain documents like address/ age proof which should prove that you belong to some place in India. And for this purpose, the individual is not required to visit the company; he/she can directly purchase it online or through written communication while sitting in a foreign land. Also, he can purchase and the policy and submit the documents, last 3 years ITR and medical test reports in his next visit to India.
The answers to these FAQ's would help you all in deciding on a term plan. The above stated queries have been addressed and would therefore no longer be a deterrence in choosing and later on buying term insurance.