HomeLife Insurance10 Most Frequently Asked Questions About Term Insurance

10 Most Frequently Asked Questions About Term Insurance

Term insurance policies are the best option to safeguard your family’s future. These plans offer high sums assured at affordable premiums. These plans provide financial security to your family in case of any mishappening happens to you. The family’s sole bread earner prefers buying the term plans because these plans are transparent, easy to understand, and provide various benefits.

Still, many people have various doubts related to Term insurance plans. Here we will answer those frequently asked by people about term insurance plans.

What is Term Insurance?

Term insurance is the purest and simplest form of life insurance. It can give financial protection to your family at an affordable rate. With term insurance, you can get a considerable amount of sum assured (i.e. life cover) at a relatively low rate of premium. The benefit amount may be paid out to the nominee in case of the insured person’s demise during the term of the policy.

Term insurance is a way to ensure that, if something happens to you, your family has a financial backup. Term plans are simple, easy to understand, and straightforward. This makes them a popular choice among people who want to buy life insurance. 

Read further to find answers to some of the most common questions about term insurance.

Read more: 10 Best Term Insurance Plans in India

1. Do Term Plans Offer Survival Benefits?

Survival benefit means the policyholder can benefit from their term insurance if they live past the policy term. In a term plan, this is only possible if the policyholder bought a Return of Premium Term Plan.

2. Can Smokers Get Term Insurance?

Even though smokers have a higher risk in terms of life span, they can still buy term insurance. The premiums may be higher because smokers are more likely to fall ill.

3. Does The Premium For Term Insurance Change Over The Life Of The Policy?

Usually, the premium for term insurance stays the same for the whole policy term. However, the policyholder’s premium may go up if changes in your health and lifestyle habits impact your life span.

4. How Is Accidental Death Insurance Different From Term Insurance?

Term insurance can give a sum assured amount to the beneficiary if the insured person passes away, which can happen for many reasons, including an accident. Accidental death insurance, on the other hand, only pays out if someone loses their life because of an accident.

5. Should I Buy An Extra Term Plan If My Employer Already Offers A Group Term Plan?

Yes, it would be best if you bought a separate term plan on top of your employer’s group plan. A group policy may only be effective if you work for the same company. If you quit your job, the policy may end, and you won’t be covered anymore, which could risk your family’s finances. Also, the benefit of a group plan is often small and might need to be more to cover your family’s future costs.

6. Is My Term Plan Valid In Another Country?

Yes, life insurance policies can still be valid and may be used if someone passes away in another country. It’s important to let your insurance company know about your trip abroad. Ensure that you are well-read on the terms & conditions of the policy before buying one.

7. Can A Non-resident Indian Buy Term Insurance?

Yes, NRIs who work or attend school abroad can buy term insurance in India. There may be some extra paperwork needed. NRIs can either buy a policy while they are living abroad or while they are in India.

8. Does Term Insurance Help You Save Money On Taxes?

Yes, under Section 80(C) and Section 10(10D), the person who buys term insurance can save taxes. Under Section 80(C), a policyholder can claim tax deductions on premiums up to Rs. 1.5 lakh per year. Section 10(10D) ensures that term insurance death benefits are not taxed.

All these tax benefits vary in terms of amount. This variation could depend on your chosen policy, whether you have opted for the old/new regime or other factors. Also, note that tax deductions and exemptions are subject to change over time.

9. Do Insurance Companies Look Into The Death Of A Policyholder?

Yes, the insurance company has every right to look into the policyholder’s demise if they think it’s essential.

10. Can A Policy Holder Buy 2 Policies With Separate Terms?

If a policyholder has 2 separate term plans, he must inform the second insurance company about the first plan. Also, he needs to get acknowledgment from the first insurance company.

Winding Up

We hope the answers above have answered all the common questions about term insurance. Ensure that you use a term insurance plan calculator while buying a plan to get an estimate of the premium you need to pay for your coverage needs.

Ajeet Sharma, the founder of Financegab and a well-known name in the field of financial blogging. Blogging since 2017, he has the expertise and excellent knowledge about personal finance. Financegab is all about personal finance which aims to create awareness among people about personal finance and help them to make smart, well-informed financial decisions.


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