Purchasing a term insurance policy is a critical decision you must make with caution. It provides financial security to your loved ones in case of your untimely demise and ensures they fulfill their dreams. However, filling out a life insurance form remains a considerable task in an age when policies can be purchased with the click of a mouse. In most cases, the insurance salesperson, in his desire to sell, fills in the details on behalf of the insured.
As term insurance is a contingency plan meant to provide financial assistance to your family, it is crucial that the claim made by your nominees is not rejected. When you consider that many claims are rejected because of either incorrect or false information provided by the policyholder, it becomes crucial to ensure that the form is filled out properly and accurately. This article will outline the main factors you should pay attention to while finalizing your policy purchase.
What is a Term Insurance Policy?
Term insurance is a simple and affordable life insurance product. The term plan pays out a lump sum death payment to the insured’s beneficiaries in the event of their death during the policy tenure.
If the policyholder has opted for any rider, for example, a critical illness rider (that covers the diagnosis of certain critical illnesses), then the insurance company pays out an additional sum assured (stipulated under the rider) in case the insured event occurs. However, no compensation is offered if the insured survives the whole term of the policy, except in the case of return of premium policies, where the insured receives the total of all premiums paid.
Now that you know about the primary term insurance benefits, you should focus on filling up the policy form carefully. Incorrect details or errors in the information provided can lead to claims being rejected in the future. This is undoubtedly a scenario you wish to avoid for your loved ones in times of grief and uncertainty.
Documents needed for filling out the Term Insurance form
Some essential documents are required for filling out your term insurance policy form. These include the following:
- Age proof – You can submit a Driving license, Passport, school/college certificate, etc.
- Identity Proof – This can be a Utility bill, passport, Aadhaar card, etc.
- Income proof – You will need your Income tax return and employer’s certificate or Form 16.
- Medical History – Here, you will be required to give the Medical Test Reports.
- Details of Previous Life Insurance Purchased – The policy papers of other life insurance policies that you currently have might be needed.
You should keep these documents handy to save time and hassles while completing the insurance application process.
Things that you should pay proper attention to while filling out the form
Purchase Adequate Insurance Coverage
Choosing how much coverage to purchase is critical and should be approached with caution. You must have enough coverage to cover all of your liabilities (such as home loans), your family’s living expenses for at least 30 years, and future goals such as a child’s marriage, education, and so on. Unfortunately, some people hastily choose without considering future consequences. Take your time and do your homework before you select your coverage amount.
Correctly disclose all information
You must correctly disclose all information in the policy forms and double-check it before submitting. Let us take an example here. Suppose you provide incorrect or misleading information about your health in the proposal form. The company later finds out that the cause of death was a health issue you did not reveal in the policy proposal form. This may lead to the insurance claim of your nominees being rejected. As a result, you should always enter correct information about your age, health, smoking or drinking habits, or past medical history in the proposal form.
Always include the nominee’s name
Include the nominee’s name when submitting the insurance proposal form. A nominee should ideally be your children or spouse.
Describe all of your current policies
Before purchasing a new term insurance plan, you must disclose all relevant details about your current insurance policies (including the insurance provider’s name, the sum assured amount and the policy number). People frequently refrain from mentioning this information in the proposal form because it is time-consuming to sift through old documents to find the details. However, hiding these details can sometimes be one of the reasons for claim rejection. Hence, get out your policies and note their details before setting down the proposal form.
Avoid typos or other detail-related errors
Many people make typos or spelling mistakes that lead to incorrect names, addresses, and other details being submitted. Watch out for such typos since they may make a claim invalid. Give the policy document a look-over at least twice before submission. Such errors are more common than you think and should be avoided by all means. In this context, fill up your form yourself instead of giving it to your agent. This will reduce the chances of errors automatically.
Term insurance is one of the most prudent investments for your family’s future well-being. Term insurance benefits your nominees in the event of your untimely demise while helping them stand financially in such distressing scenarios. However, while filling out the form and applying for term insurance, ensure that you invest a little time into the process.