INTERVIEW QUESTIONS INSURANCE TERM LIFE INSURANCE DETAILS

Question: I just completed my post graduation and joining my first job next month. My father expired recently and the only income for my house will be mine when I get the job. So I would like to ensure that my family will be compensated in case if something happens to me. Should I go for a term insurance policy?

Answer: A term plan covers the life of the insured and compensates the beneficiary named therein on the event of death of the insured. The insured pays an annual premium to the insurance company (premium can be paid at other frequencies also) for a specified tenure. The quantum of cover needed for the life is decided by the policy holder and the premium is accordingly decided by the insurance company. Remember that premium rates change based on the age of the insured. There is also a variation depending on the health conditions, past health history and smoking habits of the insured.

Unlike most other insurance products, a term plan only covers the life of the insured person and does not have an investment component. This means that there is death benefit, but no maturity benefit associated with this product. If the insured dies within the tenure of the policy, the beneficiary is paid the sum assured amount. On the other hand, if the insured survives the tenure, no amount is paid back on the maturity of the policy. There are some variants in this in the form of return of premium. In case of a term plan which promises return of premium, the premium will be returned to the policy holder if he survives the tenure.

So you being young, you are advised to go for money back policies or endowment policies which comes with an investment benefit too..

A term plan covers the life of the insured and compensates the beneficiary named therein on the event of death of the insured. The insured pays an annual premium to the insurance company (premium can be paid at other frequencies also) for a specified tenure. The quantum of cover needed for the life is decided by the policy holder and the premium is accordingly decided by the insurance company. Remember that premium rates change based on the age of the insured. There is also a variation depending on the health conditions, past health history and smoking habits of the insured.

Unlike most other insurance products, a term plan only covers the life of the insured person and does not have an investment component. This means that there is death benefit, but no maturity benefit associated with this product. If the insured dies within the tenure of the policy, the beneficiary is paid the sum assured amount. On the other hand, if the insured survives the tenure, no amount is paid back on the maturity of the policy. There are some variants in this in the form of return of premium. In case of a term plan which promises return of premium, the premium will be returned to the policy holder if he survives the tenure.

So you being young, you are advised to go for money back policies or endowment policies which comes with an investment benefit too.. Source: CoolInterview.com

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