Term insurance plans are the regular life insurance that almost everyone who is a responsible member of the family plans to buy. It is one of the major requirements if you are the sole earner or the family. Term insurance plans are basically your family’s financial security after your demise.
You must be familiar with the advantages and disadvantages of term insurance plans, but there are many term insurance hidden facts that you might not be aware of. Term insurance is not a life cover plan, it is something more than that. Here, we will discuss the facts of term insurance that hardly anyone tells you. Everyone has a basic idea about the features and other aspects of term insurance plans, but there are many more term insurance facts that only a few people know.
Shekhar is a man in his 40s and the sole provider of 3 children, a wife, and parents. He is searching for a term insurance plan to secure his family in case of his sudden demise. Shekhar almost gathered enough information about various term insurance policies. Insurance agents did not disclose the term insurance facts that ended him with a term insurance plan which do not suit his expectations.
Therefore, he needs to compromise on a few of the benefits. If he would have known these term insurance hidden facts, he would have chosen the best plan according to his needs.
To avoid such situations that can lead you to buy the wrong term insurance, you must know more about the term insurance’s hidden facts. There are many facts about term insurance plans that can change your whole perception of your term insurance policy.
Let’s discuss the term insurance’s hidden facts in detail, but before that, we will explore more about the term insurance.
What is Term Insurance?
Term insurance is the pure life insurance that a person buys to safeguard his family financially in his absence. The term insurance plans provide a lump-sum amount to the nominee in case of the policyholder’s demise. Nowadays, everyone has to pay many EMIs, Loans, and other unavoidable expenditures. If the family’s primary earner passes away, it becomes difficult for a family to survive with so many expenses lingering over the head. In such a situation, a Term insurance plan comes to the rescue.
The policyholder buys the plan by paying regular premiums, and if he passes away during the term duration of the plan, the family gets the benefits. Term plans do not provide an advantage to the policyholder during his lifetime. However, it covers some critical illnesses if you pay an extra amount to the finance company.
The term insurance policy premiums depend on the policyholder’s age, medical conditions, and sum assured. If you buy the plan at a later stage of your life, you need to pay higher premiums. Similarly, if you have an already existing medical condition, you need to pay high amounts as a premium. Choosing the higher sum assured also leads to high premiums.
While buying the term insurance plan, you must gather all the information, including the term insurance hidden facts, or else you will end up with inappropriate plans.
Now, it’s time to delve deep into term insurance’s hidden facts. Let’s find out the details.
8 Hidden Facts about Term Insurance
Knowing about term insurance hidden facts can help you avoid the scams that can happen to you while buying term insurance. Don’t rely on any agent for the necessary information. Always do your research and find out the hidden facts about term insurance. Agents usually tell you general information like the benefits and features of the plans because they only care about selling their plans. Here, we will discuss some hidden facts about term insurance that will enable you to find the best term insurance for yourself and safeguard your family.
Let’s get started with the term insurance’s hidden facts and discuss them one by one.
1. Real-life Insurance
The term insurance hidden facts explain the difference between insurance plans associated with investment and the actual life insurance plan. Companies offer many insurance plans like ULIPs, Money back plans, Endowment plans, etc. However, these insurance plans are investment types insurance plans. The facts of term insurance are that they offer you the life cover and sum assured, but they do not provide you the complete life cover as a pure life insurance plan does.
The pure life insurance plan offers you a high sum assured, and you can get a chance to choose the term period for the sum assured. Also, the premium amounts are less compared to investment-type insurance plans.
So, next time you buy a life insurance plan, choose wisely keeping these term insurance hidden facts in mind.
2. Sum assured in 20 times your income
Have anyone ever told you about the facts of term insurance explaining the sum assured depending on your salary? If not, we are here with these facts about term insurance. The sum assured you wish to choose for your family’s financial security must be at least 15-20 times your income. This is due to the ever-increasing inflation that can reduce the value of money and elevate the living expenses by the time your term ends.
If you choose any regular life insurance plan, you need to pay higher premiums for a higher sum assured but talking about the hidden facts about term insurance, it offers you a higher sum assured at lower premiums according to your paying capacity.
This is also one of the important term insurance hidden facts that no one will tell you during buying the term plans.
3. You can increase the sum assured during the term period
Most of the policyholders are unaware of the hidden facts about term insurance that they can increase the sum assured during the term period. Due to a lack of knowledge about the term insurance hidden facts, many people end up taking a new term insurance policy and wasting their money. The term insurance has all the facilities to boost the sum assured while the term plan is active. This will increase your premiums according to the increased sum assured.
Policy sellers or agents don’t tell this term insurance hidden fact to the buyers because they merely think about making money. So, learn about the hidden facts of term insurance before taking any action.
4. False disclosures affect the claim
This is a very important fact about term insurance plans as many people provide false details while buying the term plan to get higher claim amounts. But, this can lead to the rejection of claims which can be dangerous for your family’s financial security. So, while buying the term plan, disclose all the information about yourself honestly, such as if you consume tobacco, are a smoker, have any medical history, or have any disease like diabetes or heart-related disorders, etc. This may affect your sum assured and premiums, but your family will be secured.
5. Term insurance is a contract
These hidden facts about term insurance are hardly told by your insurance provider during buying the policy. The term insurance plans are the contract between you and the insurance company that they will pay your family a certain amount in case of your demise during the contract period, and you will pay the premiums during your term period. This does not offer any return on your premiums or the end-of-the-term plan.
6. Types of term plans
The types of term insurance also come under the hidden facts about term insurance plans that you must be aware of. Many people don’t know the types of term insurance plans available such as premium plans, return of premium plans, guaranteed issue term plans, and financial expenses term plans.
Knowing these term insurance hidden facts will help you compare different types of term policies and find the best one for you.
7. Extend the coverage
Many people are unaware of these hidden facts about term insurance that they can get more comprehensive coverage even at the age of 85 years. However, some insurance companies also provide you with benefits for up to 100 years. Therefore, research properly and learn about term insurance hidden facts. You must choose the term plan that offers you more extended coverage for your age.
8. Term plans are not just for earners
There is a misconception that only the primary earner can buy the term plan, and that non-earners do not require a term plan. However, it is false according to the term insurance hidden facts. If you do not have any secure income, you can still buy a term plan but make sure to pay premiums on time, or else your policy can go to waste.
Before Buying a term insurance plan, you must find out all the hidden facts about term insurance to buy the best plan that suits your needs. These term insurance hidden facts might give you an idea about prevailing myths about the term life insurance policies.
Term Insurance Hidden Facts – FAQs
Can we buy a term insurance plan online?
Ans. Yes, as one of the hidden term insurance facts, many people don’t know they can buy the plan online. This helps them save the commission amount that they pay to the agents.
Can we customize the term insurance plans?
Ans. Yes, Many riders allow you to customize your term plan according to your needs. This is also one of the term insurance hidden facts that no one tells you.