Short Term Disability Insurance - Short term disability insurance is a type of insurance plan designed to compensate for the lost income due to a disability
Buying term insurance is an important decision, irrespective of whether you are doing it at an early stage, where you are young and have a long family life ahead of you, or whether you are doing it at a later stage. A good term insurance plan should first of all provide you with the peace of mind that you are looking for. The insured should be settled in their mind that their family is well covered, and shall not be distressed for finances in the case of their passing away. Hence, it is crucial that the insured be extremely objective while choosing their term insurance policy, and not fall for any loopholes that may turn the decision into a mistake later. Discussed in this article are
If the policy buyer is slightly budget minded, their first instinct might be to buy a term insurance policy which is the most budget friendly. The decision will be based mainly on the affordability of the premiums of the various policies, and the cost effectiveness. While it is understandable that the financial decision has to be prudent and according to one’s capability, it is strictly advisable to have a thorough comparison of all the premiums beforehand. The cheapest insurance plan might not always be the most comprehensive. That is precisely why the buyer should check that their priorities are being met, instead of ruling out a policy because of its higher premium.
A young and unmarried professional might not prioritize investment in insurance at that stage. They have their own set of aspirations, and they wish to invest in the enjoyment of other pursuits in life. However, not thinking seriously about term insurance early on can prove to be a mistake later. A person who starts paying premiums for term insurance at a younger age will pay lesser premiums, since the company will negotiate a lower rate, seeing that they are in the best of their health. This can soon change if you allow the discounted premiums to let slip by.
Insurance companies negotiate the premium with the prospective client based on their existing health conditions, their perceived youth, and the sum insured. Conversely, there is a tendency to evaluate the client for any potential medical conditions worsening, or any adverse lifestyle habits which may deteriorate in the future. In the case of such conditions, companies may tend to impose ‘loading’ charges on the policy buyer, either in the form of increased monthly premiums, or adding exclusions to the policy. The client may get disheartened at this, and consider it to be a bad business proposition. They may not accept the company’s willingness to protect them at all costs. Rejecting an insurance policy altogether because of ‘loading’ tendencies by a company might be a mistake in the long run. It should be seen as part and parcel of the underwriting process, and having a conditional term insurance is better than not having one at all.
Untimely death is not the only crisis that may occur. Disability may occur due to accident, or onset of terminal health conditions. In such situations, the person’s ability to earn their own income or continue the payment of their premiums is affected, and they may be left incapable to handle the medical emergency. It is best to be prepared for such situations beforehand, by having added the relevant riders to the term insurance policy. For instance, several insurance policies provide the option of adding critical illness, or accidental disability riders. The client should not make the mistake of neglecting the merit of these riders. If they are buying a term insurance, they might as well go the full mile, and ensure that all the possible circumstances of adversity are covered by checking all the applicable riders.
Several people are wary of the cumbersome paperwork involved in underwriting processes, or do not pay attention to the clauses and provisions contained in the policy documents. This often happens due to a lack of attention being paid to the agent or the website. For instance, parents who consider themselves to be technologically deficient might have the forms filled by their children, or their colleagues and so on. While it is fine to consult someone who understands the process or technical side better, it is a huge mistake to not go through the term insurance policy documents yourself. It is your life that is being insured, and not being absolutely clear about the provisions that you are signing up for can have disastrous consequences later on.
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When purchasing your term insurance, it is important to keep in consideration not just the outstanding loans that you have on your existing assets, such as home loan, education loan etc, but also to factor in inflation in the future and so on. If the policyholder opts for a premium of lower cover value, they run the risk of having an inadequate sum assured, which could fail to suffice at a time when it is required. The term insurance is not just a contingency fund, it should be able to provide relief in the case of car loans, credit card bills etc. A good rule of thumb that is usually recommended, to avoid making this mistake regarding term insurance, is to go for a term insurance that is at least 12 times the yearly income of the buyer.
If you are filling the form for your term insurance, you should be thorough with the facts of your health status, age, employment details etc to avoid inaccurate representation. It is often the case that a casually filled form will turn out to have inaccurate medical details or some other mistakes with the term insurance. This will be treated as a fraud, and may trigger exclusions contained within the policy brochures, that can prevent the loved ones of the policyholder from processing the claims.
It is the responsibility of the policyholder to inform the nominees about the specific policy that they have purchased, the company with which it is held, and where the documents are stored. They should be provided with a physical copy of the policy documents as well as the receipts of the premium payments. In case the nominees are in the dark about these details, they may fail to claim the term plan within the stipulated time after the death of the insured.
Term insurance provides a good option to protect your family members as well as your loved ones in the case of medical emergencies or otherwise. It requires just a bit of extra attention to detail, to avoid making silly mistakes that may cause unnecessary problems in a time of emergency. Term insurance should be treated as an asset for the family, and due diligence should be exercised before and after buying it.