Term Life Insurance FAQ

I already have cover through work. Won’t that be enough?

You will need to check if the cover provided is sufficient for your needs. Will it cover existing debt (your mortgage, car loan and credit card debt)? Will it provide for your child’s future education needs (if you have children)? Will it help pay for your family’s basic needs up until your children become financially independent? Usually, life insurance cover given through work is smaller than what you actually need. Also, this cover is only in place for as long as you remain employed in your current job. When you change employment, chances are, you will not be able to take the existing coverage with you. You will have to make sure that your new employer provides a similar type and amount of coverage. That is why it is highly advisable to get your own life insurance policy. You get to keep it with you even if you change your work status.

Will the coverage of my term life insurance take immediate effect or is there a waiting period?

Your coverage will take effect as soon as your policy is issued.  However, there may be some restrictions as to any claims. For instance, suicide and death caused by pre-existing conditions may not be payable within the first two years of the policy.

For how long can I continue renewing by term life policy?

It depends if you have a policy that guarantees renewal. However, in most cases, you can usually renew your policy until the age of 80. If your policy has a conversion option, you can opt to convert your term life cover into a permanent life insurance policy at that age. With the conversion option, you can do this without having to present additional medical proof of insurability (i.e. no health questions to be answered and no medical exam to be taken).

Will my premiums change every year?

It depends on the kind of term life insurance you have. If your policy is a yearly renewable term life policy (and premiums are not guaranteed), premiums may change depending on your age.

If you have level term life insurance or guaranteed term life insurance, the premiums will remain the same within the coverage period unless all the rates are changed for your particular premium rating class. However, after you renew the coverage, the premiums will be raised based on your current age at the time the policy is renewed.

Will the coverage decrease as I age?

No, the level of coverage usually remains the same, but premiums may be adjusted based on your age. However, there is also what is called a decreasing term life insurance where the level of coverage does decrease over time. These are usually taken to cover a debt that is also being paid up over time.

What if I changed my mind about buying the term life coverage?

Most life insurance companies will give you a free look period where you can review the terms and conditions of the policy and opt to cancel it and get your premium payments back. You can do this within the free-look period, which is somewhere between 10 to 30 days, depending on the insurance company.

What does the term “simplified issue” mean?

This is term life insurance issued under a non-medical basis. This means you don’t have to undergo any medical examinations to have the policy issued. You will just need to answer some medical-related questions.

Will my coverage be cancelled when I get sick within the policy period?

No, changes in your health condition will not affect your coverage for the entire life of the policy. That means that you still enjoy the same level of life insurance cover for as long as your policy remains effective.

Can I get additional term life insurance if I already have insurance?

You can usually get additional insurance but some insurance companies will also review your existing coverages to see if it matches your income level. However, once you have get term life coverage on top of other life insurance policies, you can claim all the full benefits for all the policies.

How do I make changes to my term life insurance policy?

All you need to do is get in touch with the customer service department of the insurance company and request for these changes made. Changes that have no bearing with the policy (i.e. change in surname, address, etc.) will usually just need an amendment form filled up and signed by you. Relevant documents may be required.  Other changes that have a bearing in the policy (i.e. increase in coverage, etc.) may have additional requirements.

Do my beneficiaries have to make a death claim within a certain period? Or can my beneficiaries make a claim even after years after?

There are no deadlines or time limits for death claims. However, it is ideal for your beneficiaries to make their claims as soon as they can. To collect the claim, they need to present a death certificate.

If I stopped smoking, will this affect my premiums?

Yes, it will affect your premiums for the better. However, you will need to show proof that you have quit smoking. Also, some insurance companies require that the change in your smoking habit be in place for a certain number of months before they will consider you as falling under the “non-smoker” bracket and decrease your premiums.

I ride a motorcycle to work. Will this affect my term life insurance application?

Some insurers consider motorcycle riding a dangerous activity and may increase your premiums accordingly. There are also others that may deny you coverage. However, this really depends on the underwriting policies of the insurance company.

Which is better, term life insurance or whole life insurance?

It depends on your needs and situation. Term life insurance is for temporary insurance coverage (if you need coverage for just a certain number of years) while whole life insurance is for more permanent coverage. Term life insurance starts with low premiums but these premiums will increase over time. Whole life insurance policies usually have level premiums that are more expensive at the onset.

Will my beneficiaries have to pay taxes on the proceeds of the term life insurance?

Proceeds of life insurance are tax-free. However, if the proceeds are counted as part of your estate, it may be subject to estate taxes.

Can I take out a loan on my term life insurance?

Term life insurance does not carry any cash values and thus you can’t take out a loan on your term life insurance policy.

If I survive the coverage period, will I get any refunds on the premiums I paid for my term life insurance?

If your term life insurance has a return of premium rider, the premiums paid throughout the life of the policy will be refunded to you at the end of the coverage period. However, this may considerably increase the premiums you will need to pay.

To secure your family's future, fill in the form on the right and get your term life insurance quote now.

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*Scottish Provident 2012 life cover claims paid report.