Lesser-known facts about term insurance that you should know
Everyone has a basic idea about what term insurance is. However, besides some expected benefits and features about the term plan, there are a few more that many of us are not aware of.
Ravi, a middle-aged family man of age 47 years, is searching to buy a proper term plan that can give good financial security for his family after his absence. Although he managed to collect the maximum information of the term insurance plan from his insurance agent and insurance company, he still lacked a few more important information. Due to this, he ended up choosing a plan which couldn’t meet all his expectations completely. Therefore, he had to compromise a few benefits.
In order to avoid ending up taking a term plan which could not meet all your expectations completely, you certainly have to make some efforts to know more about the plan. Remember, there is a number of insurance companies, and each company has many different term insurance plans to offer. Each plan will have distinct features and benefits to offer. At the same time, although the plans appear to be similar among different insurance companies, they will certainly have some differences in them. Therefore, it is your responsibility to take enough measures to learn completely about a term plan before you take it. Here are some lesser-known facts about the term insurance plans, which would be helpful for you to make a proper decision:
8 Lesser known hidden facts about term insurance plans
- Real life insurance
- Sum assured 20 times of your income
- Sum assured can be increased during the term period
- False disclosure may affect your claims
- Take an extended coverage
- This is a contract
- Types of term plans
- Term plan is not only for earners of the family
Here are the facts that most of the individuals who are in search of term plans should become aware of:
1. Real life insurance
There are different insurance plans like ULIPs, money-back plans, endowment plans, and many others. However, these are primarily investment types of insurance plans. Although they also have sum assured and life cover, they will not provide you a complete cover as a pure life plan could offer. In the case of a pure term plan, you can expect to get a high sum assured or choose the sum assured what you want for the term period. Besides, the premium amount is also less when compared to the investment plan.
2. Sum assured 20 times of your income
The sum assured you want to choose to provide complete security for your family should be at least 15 to 20 times of your current income. This is mainly because of the inflation factors, which may reduce the value of money and increase the cost of living over the decades. But at the same time, any standard insurance plan may increase your premium amount for a higher sum assured. But in the case of a term plan, you can still go for a higher sum assured with a lower premium within your paying capability.
3. Sum assured can be increased during the term period
Most of them are unaware of the fact that the sum assured can be increased when the policy is active. Therefore, due to this lack of knowledge, many take a new term policy and waste their money. Instead, you have all the feasibility to boost up your sum assured value while the term plan is live. However, your premium can slightly increase according to the sum assured you are likely to increase.
4. False disclosure may affect your claims
Many people trying to get more claim amounts try to provide false details. But such incorrect information provided when taking a term plan may end up in the rejection of the claims, which will only ultimately affect your family members. Therefore, you should try to disclose all information about you, like if you are a tobacco user, a smoker, or any history of family diseases and other life-threatening diseases like diabetes and heart diseases, before buying a term plan.
5. Take an extended coverage
Many people are not aware that more comprehensive coverage can be opted even up to your age of 85 years. Some insurance companies and some types of particular term plans will also provide you coverage for up to 100 years of age. Therefore, try to surf appropriately before you choose a term life insurance. It is always recommendable to buy the term plan with more extended coverage of your age, at least up to 85 years or even higher.
6. This is a contract
Remember, a term life plan is a contract between you and the insurance company to pay your beneficiaries a certain amount of money at the time of your permanent absence. However, for this benefit, you agree to pay the premium throughout the term period, no matter you don’t get any return for the money you spend.
7. Types of term plans
As one of the term life insurance facts, you should also become aware of the types of term insurance plans available. Many of us do not know the kind of plan available. To help you get some idea, there are plans like level premium term plan, return of premium term plan, guaranteed issue term plan, and final expense term plan.
8. Term plan is not only for earners of the family
Many people also have a misunderstanding that the term plan is only for the earners of the family and the non-earners need not own or cannot own a term plan. Any family member, including aged parents, homemakers, and other family members with no source of income, can still hold a term plan in their name. However, they should never fail to pay the premium for any reason because this may lead to the lapse of the policy, and the premium you paid until then might go to waste.
So before opting for a term, it is necessary that you have a thorough knowledge and term insurance plans. With all these facts, you might have got a better idea about the prevailing facts and myths about the term plan and its importance. To gain more information on term insurance, you can refer knowledge centre of iiflinsurance.com and choose the right one for your family.