5 Points to Ponder Before you Buy Term Insurance Plan
Term insurance plans are one of the most basic forms of insurance that are usually added into one’s portfolio to mitigate the various risks. These plans are simple, affordable, and flexible, and therefore quite popular amongst both expatriates as well as UAE nationals.
Very often people postpone the decision of purchasing term insurance plans, as they do not consider it a necessity. In order to ensure that your loved ones are financially secured it is vital to purchase a term insurance plan. The way these plans function is simple- in case of any unfortunate event that might lead to the demise or disability of the policyholder this policy pays a sum assured to the nominee which helps them to make ends meet during the phases of financial instability.
The insurance market in the UAE is diverse and filled with a plethora of options when it comes to choosing the right term insurance plan. In such a scenario it might appear a tedious and tricky job to choose the plan that is compatible with your needs and budgets.
In order to make sure that you purchase the correct plan, we have picked up 5 important points to ponder before you buy the term insurance plan.
Analyzing how much Coverage you Need
The motive of purchasing term insurance plan is to ensure financial cushioning for you and your loved ones. In order to provide that financial cushioning, the first step is to assess how much coverage do your loved ones need? Take a rough idea of how much would your family need after twenty years from now? How much your kids would need for their education, marriage? How much would money would your spouse need for his/her healthcare.
Another easy yet reliable method to analyze the extent of coverage that you would possibly need for your family is to multiply your current day to day expenditure by fifteen. The figure you end up with will be the amount that your family members would need as the term insurance coverage.
Choose and (update) the Nominee
While purchasing a term insurance plan it is important to be aware of the fact that these plans are not an investment and have no return value associated with it. Contrary, to the benefits of investment plans term insurance policies are designed and developed to reduce the degree of risks associated with an individual’s life. To make things simple and easy for your family members it is crucial to choose the nominee of the plan wisely.
Typically, people choose nominees as their spouse or children who will be entitled to receive the sum assured after the demise of the policyholder. It is recommended that one should avoid choosing a nominee who is older than the policyholder’s age. In such a scenario if the nominee expires before the demise of the policyholder, then the position of the nominee should be updated so as to ensure smooth settlement of the term insurance claim.
Compare and Pick the Right Policy
As mentioned earlier, the insurance market in the UAE has a wide variety of providers that offer numerous term insurance plans. In order to make the right choice it is important to compare different plans and providers based on criteria like the sum assured, policy term, payable premium, etc.
Insurance seekers can make use of online web aggregators that allow them to strategically compare, shortlist, and choose the plan that is most suitable for them based on their budget and insurance needs. Comparing term insurance plans will provide a valid scope to identify the pros and cons of different term plans which in turn will make the purchase easier and convenient for the users.
Inform the Insurer about your Medical Conditions
The premium that is to be paid by the policyholder mainly depends on two factors i.e. age and health status of the applicant. While purchasing term insurance plans it is vital to declare all your medical conditions and ailments to the insurance providers so as to avoid any hassle later at the time of claim settlement.
The majority of term insurance providers carry mandatory medical examinations before issuing policies, however, it is the responsibility of the insurance seeker to declare their medical history for smooth settlement of the claim. Declaring your medical history might increase the payable premium but it will ensure that your family members and loved ones receive the sum assured when they need it the most.
Notify the Provider about your Drinking and/or Smoking Habits
While investigating your medical history the insurance provider will enquire about your intake of alcohol and nicotine to assess your life expectancy. It is imperative to declare the exact amount of alcohol and/or nicotine that you consume so that the provider has the correct and updated information. The entire purpose of purchasing term insurance plan is to ensure that your loved ones receive the amount when needed the most.
In case you hide your intake of alcohol and/or nicotine or any of your medical conditions, the insurance provider will most likely reject your claim based on fraudulency which will land your family members in great trouble. Therefore, to make things simpler and smooth it is vital to declare all lifestyle habits and ailments.
Over to You
Whether you are single, or a family man, buying a term insurance plan is an absolute must. Nobody has the strength to predict the future, however, the best we can do is to be prepared for the worst and this is where term insurance plans help. With the above 5 important points to ponder it will become easier and simpler to choose the right term plan that fits your budget and suits your needs.