Why ULIP mis-selling has become rampant ?
Why is there so much mis-selling of ULIP? How to avoid this mis-selling? Who should take ULIP?
Term insurance is to protect your loved ones whom you may leave behind. It offers financial support to dependants so that they can live comfortably and with dignity even after the death of the policyholder. It won’t be an exaggeration to say that the pandemic has already made many of us realise the importance of having insurance like never before. The fragility and uncertainty of life have got exposed by the sudden outbreak of the pandemic making us realise the necessity of having adequate risk cover to financially protect our families. Hence, if you are considering buying a term insurance policy, here are a few things you need to know in advance:
Pure risk cover
Term insurance are pure risk policies that offer insurance cover to policyholders. It is the most affordable insurance cover as there is no investment element attached to it. If the policyholder survives the policy then nothing is returned back on maturity. If the policyholder dies during the term of the policy then the sum assured is paid to nominees. For those who want survival benefits, there are Return of Premium (RoP) plans that pay all the premiums back on maturity. It is, however, advisable not to go for RoP terms plans as they are costly compared to basic term plans.
Medical check-up
Due to the high number of claims seen during the second wave of the pandemic, reinsurance companies have tightened norms for life insurers. Therefore, insurers have also tightened their medical and financial underlying norms for customers. Hence, be prepared for insurance companies asking you to go for a medical check-up to make sure there are no underlying health risks.
Sum insured
While buying a policy, always decide first on how much sum assured you need to buy. The rule of thumb says that one should buy cover of at least 15-20 times the annual salary. The claim amount will help the family meeting financial liabilities in case of the sudden demise of the policyholder.
Smoking
If you smoke the premium rates for term insurance can increase by as high as 50 % depending on the severity of the case. Hence, it is always good to disclose your smoking habits at the time of buying the policy as any revelation later can lead to rejection of the claim by insurance companies.
Term insurance policy is an essential part of financial planning. Make it part of your portfolio to keep your family protected when you may not be around them.