Term insurance policies are pure protection covers which act as an income replacement shield.
Have a term insurance cover until your retirement age
* I am 53 years old. Is it advisable to take a term plan at this age?
Life insurance is to provide financial support to one’s dependants and family in his/her absence. Term insurance policies are pure protection covers which act as an income replacement shield. The thumb rule is to have a term insurance cover until your retirement age. Therefore, it is prudent for you to first evaluate your needs, income, savings, age and dependency before purchasing the appropriate term insurance plan. Such a plan can definitely ensure you peace of mind until you plan to retire.
* Is a medical test essential to buy a term policy?
Medical examination at the time of purchase of a term insurance plan varies from person to person. The insurance company decides if the purchaser needs to undergo a test post evaluating the age, risk cover, medical declarations and the current health condition of the life to be insured. The expenses for such tests are usually borne by the insurance companies, however in some cases it might differ.
* Will the interest rate in annuity products offered for life insurance remain fixed throughout life and how does the family get back the corpus?
The interest rate on annuity can be fixed for life depending on the product option chosen by the customer. For the family to get back the corpus, the customer has to choose ‘return of purchase price’ option. The annuity is paid till the policyholder survives and on his/her death the investment corpus is returned to the nominee.
* Can I increase the sum assured of term plan after five years?
No, you would not be able to change the sum assured value of your policy. If you feel the need of higher cover you should opt for adequate sum assured right at the time of purchase, as you will not be able to change it later. Evaluate your age, financial responsibilities, health condition, savings and future life goals before opting for the sum assured. It is advisable to opt for the increasing sum assured option, where the amount increases by 5% – 10% of the basic sum assured every year. This will ensure that you are adequately insured at every life stage.
By: Pankaj Razdan
The writer is MD & CEO,
Aditya Birla Sun Life Insurance