Below mentioned are the most Frequently Asked Questions on Term Insurance.
1) How much Sum Assured / cover should I take in a term plan?
The amount of Life Insurance coverage you need will depend on many factors such as:
- How many dependants you have
- What kind of life>
- How much you need for your children’s education
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2) What is the policy term I should select?
You should choose a policy term till your retirement age or may be till a few years after retirement. Term insurance is taken to cover the risk of loss of income. So ideally take term insurance for a period in which you will be earning money. Beyond that period, the premiums paid by you will become a burden for you.
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3) Why there is so much difference in premiums in online & offline term plans?
Though the benefits are exactly the same, online term plans are much cheaper than the ones sold by agents or branches. This is because of several reasons listed below –
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4) Will I have a problem at the time of claim if I buy online term insurance plan?
No, you will not face any problem just because you purchased the plan online. Every insurance company has a centralised customer service team which attends to all the customer query/complaints. They do not differentiate between customers who have purchased online or offline.
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5) Is it secure to buy term insurance plans online?
Online transactions are completely secure and are done directly on the insurance company’s website. Today almost all financial transactions including banking, stocks, etc have moved completely online. Even Indian Railways and Airline ticketing is completely online and lacs of people are making online payments everyday.
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6) What is the difference between term and endowment insurance plans?
Both are very different offerings - they are like chalk & cheese. Term insurance is a pure risk cover and a product which is an absolute must for every individual who has any dependent relying on their income. You typically should take a term insurance
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7) Why is there a vast difference in premiums of various term insurance plans?
Insurance premium is an amount paid by the policyholder to the insurance company in return for the risk cover. Every insurance company assesses the risk differently and accordingly decides the premium. So if Company A assesses your risk to be low, they will offer you lower premiums.
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8) What is the claims ratio of different companies?
IRDA publishes an annual report which shows the detailed status of claims of every insurance company. An extract from the IRDA Annual Report 2011-12 is provided -