Are you planning to take a term plan sometime this month? That’s a great idea! It is popular among many people here in Singapore because it is cost-efficient and also provides extensive protection for a fixed period of time.
Term plans are generally seen as value-for-money insurance policies to receive protection for a particular period of time. We would like to warn you about how some policyholders have faced problems with term plans. These customers have probably come across these issues as they do not find out everything about term plans.
It is absolutely important to enquire everything about term plans so that you do not get into any trouble in the future.
Related: You Have a Life Insurance Policy Through Work. But is that Enough?
Points to be considered before taking a term plan
Let us discuss the top 5 questions that you must ask before you apply for a term plan:
1. What sort of coverage will I be getting and for how long?
We advise you to not assume that all term plans offer life cover. You get to decide the tenure of your term plan. Most insurance plans provide protection till you are 70 years old. Some of the most popular term life insurance policies in Singapore include Aviva-SAF Group Term Life Insurance, NTUC I-Term Life Insurance, and more.
2. What is not covered by the policy?
This basically means you need to check the list of exclusions. Certain situations will render your life insurance cover null and void. For example, in Singapore, if you commit suicide during the first year after the term plan is taken, the insurance provider will not pay anything. However, in some cases, your loved ones will get a refund of premiums that you would have paid. If you commit suicide after paying the premiums, your near and dear ones may be able to ask for a payout. Yes, some insurance companies do show empathy.
3. Does the plan cover permanent disability and critical illnesses?
You will have to enquire if the term plan that you like covers permanent disability and critical illnesses. Most term life insurance policies in Singapore primarily cover death, and offer either terminal illness cover or total permanent disability cover as a combination or as optional riders. If you opt for a rider for either of these conditions, your dependents will receive the entire rider sum when you become permanently disabled due to some accident or workplace hazard, or contract a critical illness.
Related: 6 Common Misconceptions Singaporeans Have When It Comes to Life Insurance
4. If I take a rider on my term life plan, will there be any additional payments needed?
Yes, when you go for any rider – such as an accidental death rider – on your term life plan, your premium amount will be upped a bit. Your beneficiaries will receive an extra rider amount, apart from the sum assured as per the original policy, if you die due to an accident or critical illness, or whatever rider you have chosen.
5. If I die because of a disease related to my lifestyle, will the payout be made?
If you die because of lifestyle diseases such as substance abuse, chain smoking, alcoholism, or obesity, your family members will not be able to procure insurance protection. You will be required to mention these conditions before you apply for a policy. This is because people with such diseases are asked to pay higher premiums.
You may have many other questions regarding a term plan. Think of it this way… the more questions you ask about the plans, the closer you get to the perfect plan for you. Make it a point to clarify each and every query by consulting with a representative from a life insurance company.
Related: 10 Questions to Ask Your Financial Consultant When Getting Insurance
When you are aware of all the terms and conditions of your term plan, you and your family will have a hassle-free experience. You must also read the fine print carefully before you apply for a term plan.
Do you agree with our list? Is there anything else that you have found to be really important when it comes to insurance term plans? Let us know in the comments below!
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