Term Insurance FAQs
Insurance
Aarati Krishnan

Multiple policies? Covid concerns? Group cover? Term Insurance FAQs!

In our PrimeTime webinar on ‘Choosing the Right Term Insurance’ last Saturday, we received many thought-provoking questions from our subscribers and viewers that we could only partly address, given the paucity of time. Here’s a more detailed FAQ on term insurance based on your feedback during the webinar. Hope you find it useful!

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Guranteed returns
Insurance
Aarati Krishnan

Prime Review: A guaranteed return product worth considering

Advisors love to promote market-linked products, but guaranteed return products remain a big draw for Indian investors. Often the word ‘guarantee’ proves such a big lure that we don’t stop to check if the returns being guaranteed are better than the savings bank interest rate! When seen from a return perspective, there are very few guaranteed products from insurers that are worth considering for long-term investing.

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term insurance riders
Insurance
Aarati Krishnan

Do you need riders on your term insurance plan?

Apart from allowing you to structure your term insurance plan in different ways through options, life insurers also tempt you with another set of add-ons – riders. Riders allow you to cover additional risks to your income, for an extra premium added to your base term plan.

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Term insurance options
Insurance
Aarati Krishnan

What options should you choose in your term plan?

Pure term plans from life insurers are, at their core, very simple products. You pay regular premiums to the insurer during your working years. The insurer promises to pay your beneficiaries a lumpsum in the event of your untimely death. This may lead you to believe that buying a term insurance policy is a cakewalk.

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term insurance
Insurance
Aarati Krishnan

How we ranked term insurance plans

Life insurance must surely figure among the most misunderstood financial products in India. Some folks think of their insurance policy as an investment, others as a compulsory portfolio component and yet others as an estate planning vehicle.

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life insurance
Insurance
Aarati Krishnan

Who doesn’t need life insurance?

Most Indians harbour the notion that they cannot do without life insurance. One of the first ‘investment’ products that young Indians are encouraged to buy, on landing a job, is an insurance policy. But this is based on a flawed understanding of life insurance as a product. Life insurance isn’t designed to enrich someone on your death. Its primary purpose is to compensate your dependants for the loss of your income in the event of your untimely death. So yes, there are many categories of folks who simply don’t need to buy life insurance. Here are the main ones.

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life insurance
Insurance
Aarati Krishnan

Until what age should your life insurance last?

When buying life insurance, most good advisors recommend that you go in for a pure term plan. A pure term plan is an insurance policy that offers life cover (with no investment component, bells or whistles – we’ll tell you why you don’t need those in a later article) for a specific ‘term’ or period of your life.

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life insurance
Insurance
Aarati Krishnan

How much life insurance do you need?

One of the very first questions you’ll be faced with after deciding to buy a term insurance plan, is – What’s the size of the term cover (what insurers call the sum assured) you’ll need?

Most folks don’t put much thought into this and go for the nice round number suggested by their insurance agent, which is usually Rs 1 crore. You can online calculators, but they can throw up widely diverging numbers.

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Insurer 
Insurance
Aarati Krishnan

Is your insurance company solvent?

Most of us buy insurance to make sure that our finances, or those of our dependants, are protected from fate’s sudden googlies. But what if the insurance company you’re relying on is in a shaky financial situation? This risk is not an outlandish one in India.

Recently, IRDA (Insurance Regulatory and Development Authority) asked Reliance Health Insurance Company to stop selling new health policies and to transfer its older policies to Reliance General Insurance Company, after finding that it was unable to maintain its solvency margins at statutory levels. In June 2017, IRDA had ordered Sahara Life Insurance to stop issuing new life policies and had directed its takeover by ICICI Prudential Life Insurance. The order was later overturned by SAT.

If you’re looking to buy a life or a general insurance policy, it is best to vet your insurer before signing up to avoid such uncertainties. What are the checks you can run to ensure that your insurer is in it for the long haul?

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Bonus 
Insurance
Aarati Krishnan

How LIC’s bonuses work

LIC’s annual bonuses come out of the valuation surpluses in policyholders’ funds. They are not guaranteed They are simple additions to your account and don’t

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