Buying a perfect term insurance plan is a tricky subject. Many insurance companies are working in the insurance sector. All have different types of plans. So it becomes difficult to choose from one of them. In this article, we are going to tell you the critical points that the agents may hide from you to earn a better commission. It is not ok to spend a dollar more for the policy. So read the article and try to understand the hidden facts of the term insurance policy.
Ten Hidden facts of term insurance policy
Today we are discussing the top ten hidden facts of the term insurance policy. The following points will help you to understand the policy better. The hidden facts are:
#1. Earlier you take less you pay
There is no age limit on insurance. So the sooner you buy term insurance the better it is for you. If you buy a term insurance plan at an early age you have to pay less amount of premiums. With the increase in age, the premium rates also go up.
#2. Pay installment until retirement
The insurance company is not going to tell you that. But you should buy the term insurance policy until your retirement age. There is no need to buy a term insurance policy up to the age of 70 or 80 years. You should buy it till you reach age 60. At that age, very few family members will be depending on you.
#3. “Per day premium” not for everyone
Don’t fall for the per day premium policy. It may look appealing but they are not for everyone. There is an age limit. If you are young you should buy the policy. But if you are older the rate of the policy will change. Suppose you are 40 years old and the policy is for the person who is 25 years old. Naturally per day premium of the policy will be much higher for you.
#4. Think casual pay annual
Another hidden fact of term insurance to keep in mind is that you should opt for paying annual premiums. When you are going to buy a term insurance policy the agent will recommend for single premium policy. But it won’t be a good choice. The best policy is paying premiums annually. You will lose less if the company bankrupts. So if you want to buy a term insurance policy go for a yearly premium policy.
#5. Increase in premium, not a big deal
With time due to your health condition, the premium of the policy can go up. Insurance companies do checkups to determine the health condition of the policyholder. So if your health is deteriorating then it is natural that the premium rates will increase. Don’t close your term insurance plan just for this issue. You have to keep in mind that the risk factor of the company is also increasing.
#6. Choose riders only if you need them
The insurance company will offer you a rider policy with the term insurance plan. But don’t choose them if you don’t need them. If you travel less there is no need to buy an accidental rider. If there is no history of critical illness in your family.
Also read: 7 Reasons Why Health Insurance is Necessary
Probably you can also skip this rider. Although rider gives you an extra sense of security, choose them only if you feel that you need them. The types of rider available in the insurance policy are:
- Accidental Death Rider
- Permanent & Partial Disability
- Critical Illness
- Waiver of Premium
- Income Benefit Rider
#7. A basic plan is a good option
There are different types of life insurance available in the market. Some of them offer you fixed income for 10-20 years after retirement. Some of them offer income and a small amount of claim. But the basic one is the policy which pays you a lump sum at the time of death. It is better to opt for this basic plan. This type of insurance doesn’t need any specific condition.
#8. Inform if you smoke or insurance can be revoked
One more hidden fact of term insurance is that smoking or drinking can revoke your policy. If you are suppressing the fact that you smoke or drink alcohol, your policy could face rejection. It is very important for the premium calculation. If you smoke the rate of premium will be higher than the normal premium. They will treat suppression of fact as a breach of contract. In a year there is a lot of claim rejection happening for hiding of facts.
#9. Give information about your health and old insurance policy
Don’t hide information related to your health condition. If you have a major Disease you should inform your agent before buying the policy. There are many types of riders that you can add to the policy. The premium depends on the information that you are providing.
Also read: A Guide to Term Insurance for senior citizens
If you have an old insurance policy show it. It will help in reducing the premium if maintained properly.
#10. The bigger the better
Don’t go for small insurance covers. If you are going to buy a policy try to buy a big insurance cover that will help you in the long run. It is better not to buy the insurance policy more than two. Read the insurance policy carefully and don’t forget to update the nominee name.
Also read: 9 Ways to Save Money on Health Insurance!
Read Also: A Guide to Life insurance Assignment and Nomination
These are the important ten hidden facts of term insurance. Now it will be easier for you to choose the right kind of insurance policy. Agents avoid telling you this critical information as it will generate less commission for him. Ask your agent if you are unable to understand something. Clear all your doubts before signing the policy. Take advice from your insurance advisor. He can be a great help in choosing the perfect policy for you. If you like this article like it and share it. For further information comment in our comment box below.