September 24th, 2020 | Updated on June 29th, 2022
Living your life beyond its comfort zone costs us the fear of the unknown. The uncertainty brings with it, anxiety and disorder. All of us like to live king size while being carefree in all respects when the skies turn dark.
A term insurance plan covers you in times of sudden financial bursts. The answer to why you need a life insurance plan is straightforward. It provides financial support to those who have dependents at home.
According to a report, during the financial year 2019, the Life Insurance Corporation of India (LIC) sold over 21 million policies.
The statistics suggest that a lot of people are getting more and more aware of the importance of life insurance policies.
Also, many of them face difficulty in understanding the basics of a term plan. To help you understand life term insurance policies, here are 10 frequently asked questions:
Q1. What Is The Need Fora Life Insurance Policy?
A life insurance policy protects your loved ones in times of distress. Sudden loss of life can bring a lot of emotional baggage with it.
Life insurance acts as a boon to keep your loved ones financially covered after the only earning member passes away. Not only this, the policy can help protect your business after your demise.
Q2. Where Can You Find The Best Term Insurance Policy Available?
There are various insurance companies available in India, one of which is Max Life Insurance.
Term insurance policies offered by them are easily customizable and can fit any budget. You can also choose from a variety of plans they offer and opt for term insurance comparison online.
Q3. How Is The Policy Premium Calculated?
Premium is a regular payment you make towards the policy until it matures after the chosen number of years.
Key factors that affect your life insurance premium include your age, gender, BMI, Height, weight, and health conditions.
The premium value is also affected if you are involved in tobacco consumption and substance abuse.
Q4. What Are Permanent Policies?
One of the most sought-after forms of life insurance policy available, a permanent policy is lifelong. It supports you financially by accumulating a tax differed cash stack over the years.
You can then finally use this cash to get a loan against it. You can also credit a part of it to fulfil the financial constraints at major milestones in your life.
Q5. Is Life Insurance A One-time Investment?
If you buy a permanent life insurance policy, it probably is for a lifetime. Although, a permanent policy carries constraints such as its cash value will be smaller for the first few years.
If you want to buy a term insurance policy, it is advised to select one at a young age. You can change the life cover as per significant events in life, including marriage, the birth of a child, your children’s college expenses, starting a new business, and various others.
Q6. What Is A Policy Maturity Amount?
A policy maturity amount or ‘fully paid’ policy is when you have paid enough monthly premium to cover the cost of the policy. Post this, your insurer will settle the claim as filed by the nominee in case of your unfortunate demise.
Q7. What Is Contestability Period In A Life Insurance Plan?
A ‘contestability period’ is like the probation period organizations offer to the employee. Typically for two years, a contestability period is where your insurer can make your policy void on the ground of misinformation or wrongdoings.
Q8. What If I Miss A Premium Payment?
Insurance policy providers generally provide a grace period of up to a month in which you can pay the premium without late fee or interest.
After this period, the insurance company will deduct the premium from the cash value in case of a permanent policy. If you have bought a term insurance plan, the insurer can terminate the policy at this point.
Q9. Are Term Insurance Policies Different Than Life Insurance?
A term plan is the most simple and easy to understand form of life insurance. While a pure term insurance plan only offers life cover, there are various other life insurance policies that you can buy to get several other benefits.
The benefits of the term plan, on the other hand, is that you can buy one at a lower premium and can custom the policy according to your needs.
There are various types of term insurance policy, such as level term policy, decreasing term policy, annual policy, and convertible term policy.
Q10. How To Calculate The Life Cover Needed?
You can determine the insurance value by looking at the financial needs of your immediate family after your demise. This could include educational expenses, home loans, taxes, and retirement funds needed.