Buying Term Insurance? You Must Ask These 10 Important Questions

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  | Published: 27 November 2019 | Last Updated On: 08 February 2021

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Term insurance is one of the best life insurance policies that offer life cover to your family in an unfortunate event of your sudden demise. In return, you as a policyholder pay a fixed premium to the insurer for a specific period of time. As compared to other life insurance policies, it is the cheapest plan since it offers protection only but not the survival benefits.

Although term life insurance policy is amongst the simplest form of life insurance policy still there are many questions and doubts that can come in the policy buyer’s mind while purchasing a term plan. Doubts such as the premium cost, the policy tenure, the death benefits, and a lot more.

In addition to this, there are several term insurance plans offered in the UAE which differ in terms of their features and benefits, purchasing an apt term insurance policy can be a confusing task especially for an individual who has no idea what to look for. Lifestyle, as well as financial requirements, varies from one person to another; a term insurance policy bought by one person may not apt for the needs of another person. This is the main reason why should you be cautious when you buy term plan online or offline. You must ask yourself the below-mentioned questions before buying a term plan so that all of your doubts and queries can easily get cleared.

Ten Questions You Must Ask Before Buying a Term Insurance Policy

Q.1. Why should I buy a term life insurance policy?

Ans: Term life insurance is a feasible option for those individuals who want to get a high sum assured by paying low premiums. It is one of the purest forms of insurance that offers financial protection to your loved ones in an event of your untimely demise. So, if you are the sole breadwinner in your family then you should buy term plan online or offline to ensure that your dependents meet their financial goals in your absence without any hassle.

Q.2. How much money will I require in the future?

Ans: Well, this is one of the most common questions that arise in people’s minds while buying a term plan. The basic rule to decide the life cover amount is that the amount should be ten or twenty times than your current income so that the basic lifestyle and financial needs of your dependents can be fulfilled successfully.However, you can also consult a financial advisor if you are not able to decide yourself.

Q.3. When is an ideal time to buy a term insurance plan?

Ans: The earlier you purchase a term plan, the lower your premium cost is as your premium amount solely depends on your age, policy tenure, health factors, etc. A lower age results in a lower premium amount which is fixed for the entire policy tenure.

The reason is very simple and straight forward. When insurer assesses the risk an individual brings to the company, young policy buyers are likely to get better terms and conditions as they have fewer health issues are also they are in a position to earn income for the entire policy tenure. So, buy term plan online or offline as soon as possible to save on the premium cost.

Q.4. Should I buy a term life insurance policy even I have no dependents?

Ans: If you are planning to get married and start a family in the future, it definitely makes sense to purchase a term life insurance plan at a younger age since the premium cost is comparatively low. An apt term plan will ensure the financial stability and security to your dependents if you are no longer in this world. Thus, it will help your loved ones to cope up with financial issues even in your absence.

Q.5.  Should I buy term plan online or offline?

Ans: Majority of people are choosing to buy a term insurance plan online. Since the term insurance is purchased directly from the insurance company, it is much more economically priced as compared to the term plan that is purchased offline. The reduction in the cost of the insurance plan is mainly because to the elimination of the high commission that life insurance companies provide to their insurance agents on their offline term plans. Also, buying a term plan online is easy and convenient as it lets you compare different insurance policies based on their features, coverage, premium, and other key factors.

Q.6. What kind of death of the insured is not covered under the term life insurance plan?

Ans: Well, there is always exclusion in term life insurance policies that one tends to ignore or forget to read in terms and conditions while opting for a term plan. For example, the death of the insured due to a terrorist attack is not covered under the term life insurance plan. Also, death due to natural calamities or due to the act of godlike earthquake, tsunami, and floods not covered under a term plan.

Q.7. How to buy term life insurance riders?

Ans: Majority of the insurance companies offer riders that also known as optional coverage to enhance the basic term insurance policy. Some of the main riders are critical illness, accidental death coverage, permanent or partial disability, income benefit, waiver of premium, etc. You can opt for any of these riders as per your requirements by paying an extra premium.

Q.8. What should be the ideal policy tenure of my term life insurance plan?

Ans: Ideally, a policy tenure offered by most of the life insurance companies in the UAE is between 5 years to 30 years or till age 100. As a thumb rule, one should always choose the policy tenure based on their retirement age and financial liabilities.

Q.9. What is the term insurance plan with survival benefit?

Ans: Generally, a term insurance plan with survival benefit is altogether different from a basic term life insurance plan. In a basic term plan, if an insured survives the policy tenure, then he/she or even the beneficiary will not get any maturity benefit. But, term insurance with return of premium plan offers survival benefits which are equivalent to a sum of premiums paid by an insured if he/she survives till the end of the policy tenure.

Q.10. How is the insurance premium decided on the term life insurance plan?

Ans: The premium cost that you pay for a term insurance policy majorly decides on the following factors:

  • Policy buyer’s age and gender
  • Health status
  • Sum assured
  • Policy tenure
  • Frequency of premium payment
  • Payout option that is chosen by the policy buyer

Moreover, the cost of the premium remains the same throughout the tenure of the policy. And the good thing about the term plan is that you are not required to invest a huge amount for the term insurance premiums every year since it is less expensive as compared to other life insurance policies.

In A Nutshell

Asking the aforementioned question before buying a term plan will ensure that you have invested mindfully and that there will be no doubt and queries at the time of making claims.