Do you know everything there is to know about term plans? Let’s shed some light on some lesser known facts.
Every person wishes to secure their families for the future. To this end, they work hard and try and save up as much of their income as possible. But living expenses and inflation keep mounting side by side. Soon, you realise that whatever you do and however much you save, your savings can never be enough to meet the needs of your loved ones in your absence.
You begin to worry that the loss of your income in your absence can stall your family’s future. But instead of worrying about it, you can take a proactive step towards securing your family’s financial future by buying a term plan.
Term plans in India are gaining in popularity because they are affordable and their high sum assured corpus can pay for all your family’s future needs. The term plans can pay for everyday expenses, children’s education, urgent medical expenses, spousal support, etc.
But are you certain that you know all about buying term plans in India Consider the following features that you may not be aware of –
* Term plans in India are the most affordable insurance product
The sum assured of the term plan is quite high, and it can be Rs 1 crore or even higher based on the plan you choose and your overall requirement. Suppose you take a term plan with Rs 1 crore sum assured for 30 years. It comes to about Rs 17 per day – which is quite a steal in terms of the protection it provides to your loved ones in your absence.
* The sum assured is not an arbitrary number, but a multiple of your annual income.
Many people are so enamoured by the high sum assured amount of the term plans in India, that they forget that the sum assured is not an arbitrary number assigned by the insurer. In fact, it is computed on the basis of your current annual income and adjusted to account for future inflation. However, it is true that the sum assured is high because it is computed to be about 15 to 20 times your current income, whereas most other insurance plans are computed for sum assured at about 8 to 10 times the current income. Do use the term plan calculator provided by the insurer before buying the term plan online.
* Some insurers allow an adjustment of the sum assured.
Though most insurance companies tell you that the sum assured will remain fixed throughout the term of the policy, some plans do allow for an adjustment in the future. The adjustment is made on the basis of an increased income, for example, in which case you are prepared to pay a higher annual premium than before. Ask about sum assured adjustment before picking the term plan in India.
* Falsifying information can result in your application or future claims being rejected
When you buy the term plan, you are asked for your personal, income and health details. You are also able to buy the term plan online, with some insurers not insisting on a medical test to complete the purchase process. However, though the purchase process is so simple, there are stringent background checks applied for all the information that you provide. You might be tempted to mention that you are a non-smoker, or misrepresent your age or income to get a lower premium payment. If any information is found falsified, your application might be stalled or even rejected. Similarly, any falsehoods that are not caught previously but which are verified at a later date might result in the term plan claim being rejected when your family members apply for the money.
Thus, knowing all the features of a term plan in India can help you make a well informed decision about buying the most suitable one as per your family’s future needs.