Term insurance: Know your category

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Term insurance

Term insurance: What is it?

Term life insurance gives policyholders death coverage for a specified period of time. In case of a term insurance policy, if the policyholder dies while the policy is effective, the beneficiary will get a lump sum payment for the insurance amount. Notably, if the insured individual lives is still alive when the policy term ends, the policy will not yield any proceeds.

Term insurance: Some commonly asked questions about term insurance

Is term insurance different from life insurance?

In case of a life insurance policy, the policyholder is entitled to maturity benefits. Term insurance provides the nominee with a lump sum payment in case of death of policyholder during the plan term. 

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Can term insurance premiums be claimed under Section 80 D?

Premiums paid for term insurance are eligible for Tax benefits under Section 80C up to Rs. 1.5 lakh in a financial year.  

Can term insurance premium change after a period of time?

Yes, your term insurance premium can change in case of increased risk due to smoking, drinking etc, or declaration of a hazardous job. 

Can term insurance be extended?

Yes, you can extend the term of your insurance plan. 

How to extend my term plan?

You can extend the term plan by paying the adjusted premium based on your age at the time of renewal of the policy. 

Can term insurance claim be rejected?

Yes, term insurance can be rejected in case of false information, delay in premium payment, undisclosed medical problems and undisclosed existing insurance policies. 

Can term insurance cover be increased?

Yes, term insurance cover can be increased by choosing the increasing cover option. Many insurance companies provide an increasing cover option. Here are some examples. a) Increase of 5% - 10% per year till your cover becomes double. b) Increase of 5%- 10% every year till your policy term ends.

Is there any age limit for term insurance?

A policyholder can buy term insurance between the age of 18 to 65 years.

Can NRI’s purchase term policy in India?

 Yes, NRI's who hold dual citizenship can purchase term insurance in India.

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