Don’t be a fence sitter

Sajja Praveen Chowdary, Head, Term Life Insurance, Policybazaar.com explains about the term life insurance policy.

Hyderabad: With talks of a third wave of Covid getting louder, the need to have term insurance, which is relatively more affordable compared to other life insurance policies, has become pronounced than before.

Reason? “If you get infected by Coronavirus, you have to wait three months to buy term insurance. This waiting window can deny protection to the family in case of an untoward incident due to the uncertain times we are living in,” Sajja Praveen Chowdary, Head, Term Life Insurance, Policybazaar.com, an insurance aggregator, told Telangana Today.

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“Insurance, rather than being a precaution, is a reactionary thing. Those sitting on the fence continue to do so. People decide in about insurance only after seeing somebody in their circle spend out of their pocket, an expense that could have been avoided if they had insurance cover,” he said.

“When the first and second waves came, people wanted to buy term insurance. But they could not undergo medical tests as they were not willing to go to laboratories due to fear. Home tests too did not happen as the collection staff were not available due to the load on the medical systems. The restrictions will be back if the cases increase,” he said.

As of now, the premium is the same for all and the policies do not distinguish between Covid recovered and those not affected. About 50 per cent of those applying for a term plan end up going for medical tests in person, particularly if the sum assured is large. About 40 per cent are assessed via tele-medicals, where a set questions are asked over phone to assess the health condition. There is no waiting period once the policy is issued. Suicide is excluded in the first year of taking insurance, he said.

Chowdary said a cover of Rs 90 lakh to Rs 1 crore is most preferred by those in the annual salary bracket of Rs 10 lakh to 20 lakh. “One should opt for the longest cover available and look to get over the payment of premium at the earliest. This will ensure that the policy does not lapse if there is a job loss or other liabilities.If this is not possible, one should at least pay small amounts regularly and keep the policy in force,” he said.

Key points

1. 1. Plan for a cover at least 10 to 12 times the annual salary
   2. Annual premiums work out cheaper than monthly premiums
   3. Make full disclosures of existing and previous medical conditions to ensure claims are not affected
   4. There will be a free-look period of 30 days
   5. Premium paid towards plans and critical illness riders are eligible for deduction under Section 80C and 80D
   6. If you are married, take term insurance under the Married Women’s Property Act to ensure that only the wife and/or children have access to the claim amount
   7. Choose the right payout option. Lump-sum, monthly income, increasing monthly income and lump-sum plus monthly income options are generally available

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