Index Of The Blog
Life can put you in highly precarious situations, and make room for uncalled surprises. Although, this is actually what makes life worth living; it can also act as a setback in some cases. With sudden incidents like accidents, health or medical emergencies or in cases of unfortunate deaths, life can almost come to a halt.
In cases like these and many more unfavourable outcomes, a sturdy insurance plan can come in handy. An insurance plan is your protector against all the odds and can guarantee that you don’t burn a hole in your pocket.
While there is a range of types of insurance plans available as per your need; life insurance, health insurance and term insurance are the more popular variants.
Term plan makes sure that your family does not have to scour for making ends meet when you pass away or land in the case of an unfortunate death. Term insurance gives your family a financial security package to help them get over the financial crisis after leaving you.
Life insurance, on the other hand, can give you the benefit of a term plan in addition to giving you maturity benefits as well. Life insurance policies can be used as a primary retirement plan or a scheme to achieve your goals in the later stage of your life.
Health insurance is very different from both life and term plans. It protects you against the increasingly high costs of medical procedures. With time and inflation, the cost of hospitalization and other medical expenses is bound to increase. Health insurance plans can come in handy during these times and make sure that a visit to the hospital does not cost you a bomb.
While insurance plans are highly beneficial and experts will advise you to go get one immediately, it is even better if you buy it in the initial years of your life. The biggest reason being, it will cost you next to nothing when you start early. There are a multitude other benefits of getting an insurance plan; each one better than the other.
In the internet age, people’s access to information has risen. Millennials especially, already know a lot about insurance. However, there still are a few things that are hidden from the mainstream. We get to you the lesser-known facts about health, life and term insurance.
1. Sum assured is not the death benefit
One common mistake that people do is that they consider ‘sum assured’ and ‘death benefit’ as the same thing. Most times, people also think that ‘maturity value’ is also the same as the sum assured and death benefit.
In reality, these are three different terms with different meanings altogether.
Sum assured refers to the MINIMUM guaranteed amount that is to be paid to the beneficiary upon the maturity of the policy.
The death benefit, on the other hand, is much higher than the sum assured amount. The death benefit is paid to the family of the policyholder in case of the policyholder’s death. The amount of death benefit ranges anywhere from 10 times the annual premium or even 125% of the annual premium paid.
Maturity value is the total amount of money the insurance company has to pay to the policyholder upon maturity of the policy.
With this, it should be clear that sum assured, maturity value and death benefit correspond to entirely different amounts and are payable at various times while holding a policy.
2. You can increase the sum assured even after getting the policy
When you buy an insurance plan in your 20s, and you are unmarried, a basic insurance plan can guarantee benefits to you and your parents. With time, your responsibilities are going to rise. With a spouse, children and ageing parents, you will need to upgrade your insurance plan to accommodate all these needs. Not to mention, you will be growing old as well and need better protection.
That is why reliable insurance companies have a clause using which you can increase the sum assured at significant milestones in life. You can avail this benefit and increase the sum assured of your incumbent insurance plan on marriage, the birth of the first child, and the birth of the second child.
It is also essential to notice at this point that the sum assured of your insurance plan is limited to only 20 times your income. This is the threshold set by insurers. You cannot buy an insurance plan which has a sum assured higher than 20 times your annual salary.
3. Claim-based loading is a myth
In the insurance world, it is a common myth that a person will have to pay an additional sum of money at the point of policy renewal if they have claimed in that policy year. People blame premium loading for this.
However, this is a myth and claims-based loading of premium upon renewal has been done away with years ago. You can rest assured that you will not be required to pay anything apart from your premium during policy renewal. If there is a change in premium, it has to be paid by the policyholder. Any other expense apart from that is not to be paid by you.
4. Policy portability
In case you are not happy with your current policy or the insurance provider, you always have the option of changing the insurance company. You can use the portability benefit given by insurance regulatory authorities and port your insurance provider. However, you will have to do this at the time of renewing your policy. But the bright side is that you can carry forward all the benefits of your old policy to the new insurer. There might be some differences with the new insurer, but the basic structure will remain the same.
5. Lifelong renewal and coverage up to 85 years
Most insurance companies provide lifelong renewal for their policies. You can renew your policy as many times as you want during the course of your lifetime. Additionally, you can avail the benefits of an insurance policy until you are 85 years of age. It does not matter at what age you buy the policy, and you can avail its benefits till you are 85.
There are many other unknown facts about insurance plans. Many of them are mostly tips and hacks that only insiders know. But with this new-found information, I hope you can make a more informed and sound decision about your insurance needs in life.
