Life insurance is entirely situational and therefore should be bought after carefully considering the needs of the policyholder and the respective policy features. This is because, with term insurance policies, there isn’t a lot of scope for making changes to the coverage after the date of risk commencement. However, some alterations or endorsements can be done on some aspects. Mostly, endorsements in term insurance are made possible through riders.Read more
Endorsement refers to alterations made to an insurance policy mid-term to the coverage, policy term, details about the policyholder, the nomination, etc. Endorsements in insurance are provisions generally available as add-on riders in car insurance policies. Any amendments made to the base policy’s terms and conditions after the policy has been issued fall in the bracket of endorsement.
Now, several life and term insurance policies are coming with the flexibility to change certain elements of the coverage. Although the term endorsement is not typically used in the case of term insurance, we can draw several parallelisms.
Endorsement is a term specifically used in car insurance referring to policy changes made by a policyholder. In the case of term insurance, there are certain changes that you can make to your policy through riders or based upon the type of plan. In fact, riders in term insurance are excellent endorsement tools to avail of extra coverage and added benefits. Labeling these changes as an endorsement would not be incorrect given that the basic idea remains the same.
However, note that not every term life insurance policy offers provisions for altering the terms and conditions after being issued, except in the free look period.
The free look period is the time offered to policyholders to look through the policy’s terms and conditions and evaluate if the offerings suit their needs. Every insurer offers a free look period of 15 days. The period starts from the date of policy issuance and allows complete liberty to the policyholder to make endorsements in their term insurance policies within this time frame. From increasing or decreasing coverage, adding riders to making changes to policy terms and premium payments - all of this can be done in the free look period of 15 days without a hassle.
While endorsements are possible after the expiry of this period, the rules are subject to the policy in question and the insurance provider. It is important to look for clauses in the policy brochures prior to purchase to ensure some room for potential changes in your term plan.
Let’s look at the most common changes that term insurance policyholders can make to their policies mid-way into the policy term. Note that these are not applicable to all term insurance policies.
Increase the sum assured - Insurance companies sometimes feature the option to increase your sum assured to cover for inflation and growing responsibilities. The top-up facility is one such measure that allows policyholders to add to the basic sum assured to ensure increasing costs at different stages of life. As mentioned already, not every term plan features this benefit and you should go through the brochure first.
Tenure extension - The policy term once decided upon can’t usually be changed. However, if you have purchased a renewable term insurance plan, the insurer will extend the policy term by default, unless you decide not to. Another way to extend policy tenure will be to convert the term insurance plan into a whole life cover.
Riders - Riders are the best endorsement tools that you can include in your term insurance policy. You can avail of additional coverage against accidental deaths and disability. Although some riders can only be added at policy inception, others such as life stage riders, critical illness riders can be opted for mid-term.
Premium Payment Frequency - Most term plans come with the option to pay premiums monthly, quarterly, half-yearly, or annually. Some insurers are now offering policyholders the option to change from one mode of payment to another. This feature is especially important for someone who is having a hard time keeping up with the cost of premiums.
Addition of a New Member - You can now add your spouse to your term insurance cover if the policy features a joint-life cover option. This ensures a sum assured on the death of either spouse within the policy term.
There are certain endorsements you can always make in the specifications of your term policy while it is still in force. From removing and adding nominees, updating addresses, to changing contact details online on the respective insurer’s website or by visiting their nearest branch or calling customer support.
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