A term insurance plan is the best option for those looking for a pure life cover. This type of life insurance comes with a low premium cost and offers benefits to the policyholder’s loved ones in case of an unfortunate death.
Things to do after purchasing a term policy
Purchasing a term policy is indeed one of the best financial decision you may take in your life. You may review the complete and comprehensive term insurance checklist while investing in such a plan. However, your task is incomplete if you do not follow it up with numerous other steps.
Following are eight things you may do after buying term insurance.
- Inform your loved ones about the purchase of the policy
The main purpose of a term insurance policy is to provide financial security to your loved ones in your absence. It is, therefore, necessary to inform your loved ones or your beneficiaries about the purchase of your term policy. By doing so, your loved ones are made aware of the policy. In an unfortunate event, they may claim the policy for which you have been making regular premium payment. You may also share information on various details of the policy such as the sum assured amount, the premium amount, the duration of the policy, as well as the insurance company name.
- Safeguard the policy document
It is imperative to ensure that the policy document is kept safe at all times. You may inform your loved ones about the location of the policy document. The policy may be kept at a location that is accessible to your financial dependents. In case of loss of the document, your loved ones may find it difficult to initiate a claim. You may take a printout of the policy document in case it is in an electronic form, say email or demat form.
- Check the policy for exclusions
This is one of the most important steps that must be conducted after the purchase of the term insurance policy. You may go through the fine print of the policy in detail. You may check the inclusions and the exclusions of the policy.
Certain insurance providers do not cover death in case of certain abnormal circumstances. This may include an accidental death due to the influence of certain substances, death caused due to a hazardous activity, death caused as a result of a criminal activity, or death due to any pre-existing medical condition, among others. Depending on the type of plan and the insurance provider, other exclusions include death due to suicide or self-inflicted injury. It is necessary to be well-aware of such exclusions in order to avoid a claim denial in the future.
- Check the policy for any errors or omissions
Though the probability of an error or omission is low, the risk cannot be eliminated. Once you receive the policy document, you may, therefore, inspect it thoroughly. You may check if there are any errors with respect to the sum assured amount, the term of the policy, your personal information, or any other details. You may also examine whether any omissions have been made in respect to certain inclusions of the term policy, or any other aspect.
- Remember your premium payment date
Many often fail to renew their existing term insurance plan. Failure to renew your term insurance may result in the policy being lapsed. In such a case, you may have to undergo a medical examination to ascertain any medical condition. The insurance provider may reject your insurance in case you are found to have health issues. Besides, you may have to bear the cost of such a medical examination.
In order to avoid such a situation, it is necessary to remember your premium payment date. You may mark your calendars and make premium payment on time. You may opt for an auto debit option, wherein the amount gets automatically deducted from your preferred bank account on the specified date. Alternatively, you may also opt for direct debit through internet banking or may set up a credit card standing instruction.
- Review your insurance policy regularly
You may opt for a certain level of coverage based on your current income, financial goals, and financial dependents. However, inflation may increase over time. Besides, the number of financial dependents may increase. Your existing level of coverage may not suffice the future needs of your loved ones. For this purpose, you may consider reviewing your insurance policy once in a while. Based on your requirements and needs, you may consider buying an additional cover.
- Be aware of the claim process
Upon the death of the policyholder, the insurance provider is liable to pay the sum assured amount to the beneficiary. However, in order to receive the death benefit amount, it is necessary for the beneficiary to make a claim. You may, therefore, inform your loved ones about the process of making the claim. While different insurers have their own set of procedures, the most standard process remains the same. Your beneficiary is required to notify the insurer and fill the claim form. It is also necessary to submit the required documents such as death certificate, autopsy report, police documents, and identity proof of the claimant, among others. Upon successful verification of all the documents, the insurance provider then disburses the death benefit amount.
A term plan is mainly brought to fulfill your nominee’s financial obligations in your absence. You may have nominated a certain family member to receive the death benefit. However, with the passage of time, situations may change and you may wish to change the nomination. In such a case, you may contact the insurance company and request a nomination change at the earliest.
The death of a loved one is a painful experience. Though nothing can replace a loved one, you may lessen the financial burden by opting for a term insurance policy. By doing so, you may enjoy peace of mind knowing that all their financial needs will be taken care of even in your absence. This helps in providing your loved ones with financial security and protection at times they need it the most.
Advantages of a term policy
There are numerous advantages of investing in a term insurance policy. One of the major term insurance benefits is that it offers coverage against uncertainties. In an event of a premature death during the tenure of the policy, the insurance provider is liable to pay a sum assured amount to the beneficiary. This amount may be used to meet lifestyle expenses, cover funeral costs, or repay an existing debt, among others. Besides, the amount also acts as an income replacement, especially if the policyholder is the breadwinner of the family. Many insurers allow you to enhance your coverage by offering numerous rider options. Some of the most popular term insurance riders include critical illness rider, accidental death rider, partial disability add-on, permanent disability rider, income benefit add-on, and waiver of premium rider, among others.
Another advantage of a term insurance policy is affordability. You may, therefore, enjoy a high level of coverage at affordable premiums. Besides, you may avail of tax benefits on the premiums paid under Section 80C of the Income Tax Act, 1961. The good news is that the death benefit amount is also exempt from tax under Section 10 (10D).
Due to such benefits, you may purchase a term insurance policy and financially protect your family.
