Important things to remember regarding your term life policy

The term life insurance policy is very affordable and allows you to have coverage given a limited budget. Premiums are lower as compared to other types of life insurance – such as whole life insurance or permanent plans. When you die within the policy period, your beneficiaries will receive the sum insured. However, once the policy lapses or the coverage period is up, and you survive that time, there are no refunds for premiums already paid.

To make the most of your term life insurance policy, here are a few things you should remember:

• The older you are, the more expensive the premiums.

  Term life insurance starts out as a highly affordable life insurance product, but as one ages (and becomes less healthy), premiums will increase considerably, especially in the last years of one’s life.

To illustrate:

• If you want continued coverage, you must continue to pay the premiums.

  There are some types of term life insurance that can continue providing you with coverage for as long as you continue paying the premiums and up to a certain age (usually 80). The sum insured will remain the same, although the premiums will change and will most probably increase. If you fail to continue with the payment, this may cause your policy to lapse and once it is lapsed, you will not be able to renew that policy. You will need to apply for a new policy.

• Be sure to read the terms and conditions of the term life policy.

  Look for words such as “guaranteed renewable”, “convertibility” as well as “length of guaranteed premiums”.

  • “Guaranteed renewable” means you can opt to renew the term life policy without needing to submit any medical proof of insurability.
  • “Convertibility” means you can convert the policy to a whole life policy after a certain period.
  • “Length of guaranteed premiums” tell you how many years the premium will remain the same until the policy is up for review and premiums can be changed.
• There are some versions of the term life policy that allows conversion into a whole life policy.

  This means that at a later age (where you are more likely to experience health problems) and it is harder to get insurance, you are still guaranteed insurance coverage (this time as whole life insurance). Read more about convertible term life policies.

• You can think of getting a joint life insurance policy.

  This is usually available for mortgage life insurance products. This means that both you and your spouse are covered with the life insurance. In the event that one of you dies, the remaining spouse will receive the insurance proceeds and the coverage will be terminated. Take note, the policy only pays the death benefit once. Learn more about when to buy joint life term insurance.

• Make periodic reviews of your policy.

  Every two or three years, take a look at your policy to see if anything needs updating. This includes your beneficiaries (if there are any beneficiaries to be taken out or added). Read more about term life beneficiaries.

• Tell the truth in your application form.

  Failing to disclose key information in your policy can result in your life claim being denied. (Know more about applying for term life insurance)

• You can change your mind.

  Most life insurance providers have a free look policy, where you have until 30 days from the date the policy is issued to decide whether it’s the cover you want. If you change your mind about a policy, you can notify the life insurance company and they will refund premiums paid.

Updated on: 05.06.2013

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