Term insurance is a precautionary financial cover that protects your family against unpredictable scenarios. As it secures their financial standing even in your absence, a term plan is often considered to be one of the most important financial instruments of today. Especially in the post-pandemic environment that demands a protection-oriented financial plan, term insurance has positioned itself as a necessity and not a choice.
While term life insurance promises comprehensive protection, some financial experts believe that just one term plan may not be enough to cover the evolving financial needs at different stages of life.
However, before you buy term insurance, whether it is one or more than one, it is important to carefully analyse your financial requirements for a suitable cover.
What is Term Insurance?
A term plan is a pure life insurance cover for a specified duration. This term could range between 10, 20, to 30 years as per your preference. In the event of your untimely demise during this term, the insurance provider pays a death benefit to the appointed nominees.
To avail of this service, you, the insurance seeker, has to pay a premium to the insurance provider. The premium amount varies depending on your age, health, and the type of cover you’ve chosen. You can also buy term insurance with riders for an added layer of protection. Riders are add-ons to your basic term insurance cover that further strengthen your policy.
One of the numerous term plan benefits is that it gives a sizable cover for a nominal premium amount. As a saving tip, it is recommended to seek online term insurance as the premium amount is usually cheaper online than it is in person. Another benefit of seeking online term insurance is that it enables comparison of different policies to find a suitable cover.
To further reduce the cost of insurance, the insurance seeker must quit their habit of smoking at least two years before they buy term insurance. This is because the premium amount is higher for smokers than it is for non-smokers.
The Benefits of Buying Two Term Insurance Policies
Although term insurance is one of the most reasonable investments with a sizable cover, just one term plan might not be adequate to fulfil all your financial requirements. To prevent a situation where the coverage you have opted for is inadequate, you can invest in two term insurance policies. Here are the benefits of investing in more than one term insurance:
· Additional Responsibilities at Different Stages in Life: Term insurance provides coverage for only a specified duration. However, as you grow older, you have additional responsibilities as you cross different milestones in life. These added responsibilities need additional cover. To ensure wholesome protection to address the increasing responsibilities in life, you should invest in more than one term plan.
· Human Life Value: When buying life insurance, the human life value calculated represents the amount of money an individual is likely to earn through their course of life. When you invest in more than one life insurance policy, the policyholder can ensure that their family can get the combined term plan benefits and the human life value is provided even after the breadwinner’s demise.
· Enhancing with Riders: Riders can help strengthen an existing cover at a nominal additional cost. When you invest in more than one term insurance you can opt for different rider options for comprehensive protection. As every insurance provider offers different rider options, you can get the term insurance benefits of different policies with multiple add-ons.
· Increase your chances of successful claim settlement: With two term insurance policies, you double your chances of getting a term insurance payout. If the claim is rejected by one insurance policy for some reason, the family can fall back on the second policy for the life cover benefit.
But what leads to a term plan claim rejection? Let us find out!
When you buy term plan, it is necessary to carefully read and understand the terms and conditions associated with the policy. It often happens that the policyholder fails to honour the terms of the policy and risks claim rejection. This can greatly compromise the financial standing of your loved ones in your absence.
Following are the clauses wherein your insurance claim can be rejected:
· Policy Lapse: Term life insurance is a service offered by the insurance company for which the policyholder is expected to make regular premium payments. When the premium payments are not made on time, the policy lapses. It also reflects poorly on the profile of the insurance seeker and results in higher premiums at the time of policy renewal. Although insurance providers give a grace period to make the premium payments, it is highly recommended to ensure timely payments to prevent lapses. This is because if in the unfortunate event that the policyholder passes away after the policy lapses, the nominees are not given the sum assured.
· Undisclosed Health Conditions: As the premium amount is higher for individuals with greater health risks, insurance seekers often think that not disclosing their health condition is a good idea to save on a few bucks. However, insurance providers usually ask for a medical examination and it is practically impossible to hide any health conditions in the tests.
The same applies to smoking habits. If the insurance provider realises that the habit of smoking was not disclosed and the individual passes away, no death benefit is payable to the beneficiaries. It is imperative to be transparent with the insurance company for complete safety.
· Non-disclosure of Other Insurance Policies: Insurance seekers are expected to let their insurance providers know about other insurance policies that they may have purchased. Withholding this information can lead to a rejection of the claim.
There should be a connecting line here at the end of this sub-topic, something like “ensure you disclose your existing term policy before purchasing another.” – Added below
To prevent this from happening, it is important to be aware of all the components of the policy before you buy term plan. Also, make sure to disclose any existing term policy or any other life insurance policy details before buying the second life cover.
It is possible to enhance your financial protection with two-term life insurance policies. You can ensure coverage for the changing insurance needs at different stages and increase the chances of a successful claim settlement. However, make sure that you disclose all the information of the existing policy before buying the second one.
You can check out Edelweiss Tokio Life term insurance plans that come with a host of benefits that ensures that your loved ones are looked after, even in your absence. With Edelweiss term plans, you can avail discounts on premiums by opting for a higher sum assured. Additionally, female insurance seekers get a discount on the premiums. You can also get discounted premiums on high sum assured. Get in touch with us today for more details.