Insurance is primarily a protection tool. If you’re looking for a plain life Insurance plan offering protection at a low premium but no returns on maturity, then term plan can be an option. Term insurance plans provide coverage for a fixed period of time and at a defined premium. During the term of the insurance cover, if the insured person expires the insured amount is paid to the nominee.
In case, the insured person survives till the term of insurance, h/she gets nothing. Lately, some insurance companies have started offering term plans with return benefits. However, in most cases, the premium of such term plans is higher.
In essence, a term insurance plan is a plain-vanilla insurance product offering comprehensive cover. Before buying a term plan online or offline, it is very important that all questions asked by the insurance company in the form is answered correctly without any ambiguity.
100% accuracy of disclosure is important because the insurance company doesn’t know anything about you, your family, your professional background or your medical conditions etc. It therefore gives you a proposal form where it asks the policy buyer to disclose relevant information about himself/herself and about the risk to be covered. Based on this information, the insurance company underwrites the risk and decides how much premium you’ll have to pay. Failure to disclose information asked on the proposal form or giving false information could lead to outright claim rejection by the insurance company.
Many insurance companies offering term plan tend to ascertain whether the policy buyer has existing life insurance cover, and if so, how much.