When you buy a term insurance plan, it is like getting extra security for your family’s future. The term policy should provide adequate insurance coverage to your loved ones in your absence. And to ensure that you get your hands on the best term insurance plan, it is important to go through all the term insurance terms and conditions carefully and with a clear mind.
Let us look into why it is so important to understand this aspect before you make the purchase.
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What is a Term Insurance Policy?
In simple language, the term insurance is a type of life insurance policy wherein the policyholder pays premiums for a specific period or the policy term. If the policyholder passes away before the end of this term, then the nominee mentioned in the policy gets a payout as per the coverage of the plan.
When you purchase a term insurance policy, the terms and conditions mention several important details that you should be aware of. Under this section, you can also see the claim settlement ratio of the insurance provider for the given year.
Important Terms And Conditions of Term Insurance
The recipient must be aware that there are some situations where things don’t work out as expected and the insurance may reject your claims. As a result, the policy document’s exclusions and terms & conditions for the term insurance plan must be well understood by the insured and their nominees.
Also, understand that every insurance company has their own set of terms & conditions when it comes to term insurance plans. Some are very generic exclusions applicable across almost every insurer and plan. Below mentioned are some of these essential exclusions that beneficiaries must be aware of.
1. Exclusion concerning the accidental death
Although the death caused by accident is covered under the term insurance policy and warrants a death benefit, the insurance company investigates the circumstances to ensure the case is authentic before settling claims. And one must note that the term plan terms and conditions are strictly adhered to prevent fraudulent claims.
If you opt for a Tata AIA term plan, you can receive coverage for accidental death depending on the terms and conditions of your policy. Moreover, if you need additional coverage, simply opt for a suitable optional rider.
2. Exclusion concerning habits and lifestyle
The insurance company asks for information about a policyholder’s habits and lifestyle before issuing a policy to determine if the policyholder is high-risk. And policyholders with habits like alcohol consumption, smoking, or consuming intoxicants are considered high-risk applicants and may have to pay higher premiums.
Based on the information, the insurance company may honour or reject a claim in case of the policyholder’s death. The claim shall, undoubtedly, be rejected if the policyholder has held back information regarding their lifestyle habits.
3. Other important exclusions may include –
- Death due to suicide, self-imposed injuries, or life-threatening aspects
- Consumption of drugs
- Death due to involvement in criminal activity
- Death due to pre-existing medical condition
An Important Aspect you should be Aware of
- The beneficiary must understand what is covered and what is expected during the claim settlement based on the policy coverage.
- Understanding of inclusion, i.e., what the term insurance policy covers and for which a death benefit will be given.
- Understanding of exclusion, i.e., what terms are excluded from coverage by term insurance, and if a death occurs under certain circumstances, the condition under which death benefits would not apply, and claims would be rejected.
Therefore, it is important that the policyholder as well as beneficiary thoroughly understands the terms and conditions of the policy before purchasing the term insurance policy as that shall ensure that their
nominees are well aware of what is covered, what is excluded, and the conditions under which death benefits would not apply, and claims would be rejected. With all this information in hand, the policyholder can make an informed decision while choosing the right plan that suits their requirements. Therefore it is best to read and comprehend the policy document carefully before signing up for a term insurance policy.