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9 Questions You Should Ask Before Buying Term Insurance

A term insurance plan is one of the most important investments you can make to provide your loved ones with financial security in case if an unfortunate incident.

  • 7,392 Views | Updated on: May 31, 2024

A term insurance plan is one of the most important investments you can make to provide your loved ones with financial security in case if an unfortunate incident. It is important for you to know about different aspects of the insurance plan. Here is a list of ten term insurance related queries that will help you understand what is term insurance and make the future secure.

Q.1: How does a personal habit like smoking matter while choosing a term insurance plan?

A: The term insurance plan is a life cover and insurance companies depend on risk assessments. If you have a higher risk of getting affected by a critical illness then the insurers charge you a higher premium. If you are a smoker then you will have to pay a higher premium than a non-smoker policyholder.

Q.2: Can the premiums change after a period of time?

A: The premium you pay depends on various factors. If you start smoking or drinking then you will have to pay a higher premium. The rule is the same for any policyholder who takes a hazardous job. Inclusion of new riders changes the premium too.

Q.3: Why should I buy an individual insurance plan when I have life insurance through my employer?

A: If your employer offers life insurance to the employees then that can prove beneficial. However, these covers are often not sufficient and you need a higher sum assured for your family’s security. In addition, the insurance cover from your employer is discontinued once you stop working for them.

Q.4: What is the difference between term insurance and accidental insurance?

A: The accidental insurance provides the death benefit only if the insured dies in an accident. The term insurance policy offers cover for any kind of death.

Q.5: What is the difference between term insurance and life insurance?

A: If you buy term insurance online then the nominees will be paid a sum assured if an untoward event takes place. Life insurance provides benefits on the maturity of the plan.

Q.6: Does term insurance have any maturity benefits?

A: Some insurers offer to return the premium on the maturity of the plan. However, this costs you higher premiums.

Q.7: Will the insurer pay the sum assured if the policyholder dies outside of India?

A: The nominees of the policyholder receive the sum assured even if the insured dies outside India.

Q.8: What would happen in a scenario wherein the policyholder has two separate term policies?

A: In case the policyholder has two separate term plans, the second insurer has to be made aware of the first policy and the first insurer must provide acknowledgment.

Q.9: Can Non-Resident Indians (NRIs) buy term insurance in India?

A: If the NRI is legally an Indian citizen, he/she can buy term insurance.

Q.10: Does term insurance have tax benefits?

A: Yes, as per Section 80C of the Income Tax Act, 1961 the policyholder can get a tax benefit of up to INR 1.5 lakh.

The aforementioned term insurance FAQs will help you to have a better understanding as to how this type of insurance policy works.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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