Questions You Should Ask Before Purchasing Term Insurance

2. How much sum assured do I need?

Your sum assured is the core of your term insurance policy - it represents the amount your family will receive upon your death. To determine the right amount, consider:

1. Your annual income and future income growth prospects.
2. Outstanding liabilities like home loans, personal loans, and credit card debts.
3. Future financial goals such as children’s education, marriage expenses, and retirement planning.
4. Inflation impact on living expenses over the coverage period.

Financial planners generally recommend a sum assured of 8-15 times your annual income. Use trusted online calculators integrated with inflation and investment growth assumptions for a personalized estimate.

Why this matters: Adequate sum assured ensures your loved ones maintain their lifestyle and meet financial obligations without monetary stress.

3. What policy tenure is suitable for me?

Choosing the proper tenure means aligning the policy term with your financial responsibilities and lifecycle. It should cover the duration until:

1. Your dependents become financially independent (typically when children complete education).
2. Your retirement age, especially if no other income sources are expected.

Longer tenures offer better security but higher premiums. Ensure that the tenure covers your entire risk period without leaving gaps requiring renewed or additional policies at higher costs.

Why this matters: The right tenure guarantees continuous protection for your dependents when they need it most.

4. When is the best time to buy term insurance?

The best time to buy term insurance is as early as possible. Younger individuals pay significantly lower premiums due to better health and longer expected life span. Purchasing a policy in your 20s or early 30s locks in affordability and long-term security.

Why this matters: Early purchase protects you against future health risks and rising premium costs, and ensures coverage throughout your earning years.

5. What benefits and features does the plan offer?

Term insurance policies differ in features such as:

1. Basic death benefit payout.
2. Availability of riders for additional protection (critical illness, accidental death, waiver of premiums).
3. Options like return of premium (gets premiums back on survival).
4. Maturity benefits (rare in pure term plans but available in some variants).
5. Premium discounts for healthy lifestyle, high sum assured, or online purchase.

Ask your agent to provide a detailed list and explanation of all features, along with any fees or charges associated with each.

Why this matters: Understanding features helps customize the policy to your needs, maximizing value for money.

6. Are riders available and should I opt for them?

Riders are add-ons enhancing your policy’s coverage. Some common riders are:

1. Critical Illness Rider: Pays lump sum on diagnosis of covered illnesses (cancer, heart attack).
2. Accidental Death Rider: Adds extra payout if death is accident-related.
3. Waiver of Premium Rider: Waives future premiums if you become disabled.

Choose riders based on your personal health, occupation risk, and financial priorities. Though riders increase premiums, they provide critical additional security.

Why this matters: Riders ensure comprehensive coverage beyond simple death benefits, protecting various financial risks.

7. What happens if I miss a premium payment?

Understand the insurer’s grace period (usually 15-30 days) allowing late payments without policy lapse. Missing payment beyond this period means your policy lapses—terminates without benefits. Learn whether and how revival (reactivating the policy) can be done, including premium arrears, interest charges, and possible medical checks.

Why this matters: Knowing this prevents unintentional loss of coverage and maintains continuous protection.

8. How do lifestyle or health changes affect my policy?

Full disclosure of existing and new health conditions or change in lifestyle (smoking, drinking) is important. Such changes may lead insurers to increase premiums mid-term, deny claims, or cancel policy. Inform your insurer promptly to avoid problems.

Why this matters: Transparency ensures claims are honored without surprises or disputes during claim settlement.

9. How quick and simple is the claim settlement process?

Ask the insurer about claim submission procedures and required documents (death certificate, policy proof, ID proofs). Enquire about online claim support, average settlement timelines, and customer service availability. Opt for insurers known for efficient, hassle-free claim assistance.

Why this matters: Smooth claims process eases financial strain on bereaved families during difficult times.

10. Is my policy valid if I relocate abroad or die outside India?

Many insurers allow you to retain your policy if you move abroad but require prior notification and may restrict coverage by country due to higher risk. Understand these terms to avoid invalid policy or claim denial.

Why this matters: Knowing geographical coverage ensures uninterrupted protection irrespective of residence.

11. What deaths or situations are excluded from coverage?

Typical exclusions include:

1. Suicide within first 12 months.
2. Death due to engaging in hazardous sports/activities.
3. Participation in criminal acts or war.
4. Pandemic or natural disaster-related exclusions (varies by policy).

Why this matters: Getting clarity on exclusions avoids claim rejections and uncovers the need for supplementary coverage.

12. Can I modify my coverage or premiums later?

Some policies let you increase sum assured or add riders over time, reflecting changing financial needs. Also, premium payment mode changes (annual to monthly) may be allowed. Verify flexibility, additional costs, or medical underwriting required.

Why this matters: Flexibility maximizes long-term policy relevance despite life changes.