Term Insurance Plan Terms and Conditions
Whenever you go to buy a term insurance policy, you are also informed about the term insurance plan terms and conditions by the insurance company while buying term insurance. These terms and conditions are required to be followed by the policyholder.
The terms and conditions of the term insurance plan mention all kinds of details related to the term plan. It also mentions things that will not be covered under the term plan under certain circumstances.
The terms and conditions of a term insurance plan provide you with detailed information about the free-look period, grace period, premium mode/frequency, exclusions and inclusions. Therefore it is necessary that before buying a term insurance policy, you must read the terms and conditions of the term insurance plan carefully so that you are aware of all its terms and conditions.
A term plan meets the financial needs of your family even in your absence. Taking a term insurance policy can be very beneficial for you. While taking a term policy, you must read the terms and conditions of the term insurance plan carefully.
Now below we are providing you detailed information about Term Insurance Plan Terms and Conditions After reading it completely, you will be able to get complete information about the terms and conditions of the term plan.
- Free Look Period:
A free look period of 15 to 30 days is provided by the insurance company while providing you a term insurance policy. If you are not satisfied with your term insurance policy, you can choose to exit your term insurance policy within this free look period.
If you choose to exit your term insurance policy under a free look period, all your premiums paid are returned by the insurance company.
It is to be noted that all your premiums are refunded after deduction of medical examination expenses and proportionate risk premium by the insurance company from your premium.
- Grace Period:
In order to continue with a term insurance policy, you have to pay a premium for term insurance. Your term insurance plan lapses if you do not pay your premiums on time.
You get the option of monthly, quarterly, half-yearly, annual lump sum premium payment options to pay the premium for your term insurance plan. If you do not pay your premium by the due date, then you are provided a grace period of 30 days by the insurance company.
During this grace period if you pay the premium of your term insurance plan then you can continue with your term insurance plan and if you do not pay the premium within this 30 days then your term insurance The plan ends.
- Revival of Policy:
You are provided with the option to revive your term insurance policy by the insurance company. You can revive your term insurance policy within 2 to 5 years of the lapse of your term insurance policy.
For this, you have to pay the premium paid during this period along with the applicable interest rate. You can revive your term insurance policy if you pay the premiums along with the interest due during your policy lapsed period.
- Tax Benefits:
You are also provided with tax benefits on the premium paid for term insurance policies. You can apply for tax benefits under section 80C and 10(10D) of the Income Tax Act, 1961 on the premium paid for your term insurance. This income tax benefit is subject to tax laws and conditions.
- Nomination:
In a term insurance policy, the policyholder has the right to change the nomination at any time. At the time of taking the policy, a person has to be nominated by the policyholder to receive the insurance benefits. If the policyholder wishes, he can change his nominee later also as per his wish. For this, the policyholder has to inform the insurance company in writing.
- Premium Mode / Frequency:
The terms and conditions of a term insurance policy also ask you to pay the premium for your term insurance plan regularly. Your term insurance plan lapses if you do not pay your premium regularly.
There are several options offered by the insurance company for the premium to be paid by you for the term insurance plan. You can choose to pay your premium monthly, quarterly, half-yearly, annually or in one lump sum. You can choose any of these premium payment modes as per your convenience
- Loss of Original Policy Documents:
If the original document of your term insurance plan is lost or destroyed due to any reason, the policyholder can request the insurance provider company to issue a copy of the policy documents.
- Incontestability:
If the terms and conditions in the sales brochure of a term plan are different from the terms and conditions of the original policy documents, then the terms and conditions mentioned under the original policy documents shall be followed by the policyholder.
- Suicide:
The terms and conditions of term insurance do not provide any insurance benefit for any death related to self-harm or suicide. If the life assured commits suicide within 1 year from the inception of the term insurance policy, 80% of the premiums paid by the life assured till the date of death are returned by the insurance company to the nominee.
- Exclusions under Accidental Death:
In a term insurance policy, insurance benefits are provided by the insurance company in case the policyholder dies due to an accident. But some exclusion clauses are also applicable in this by the insurance company, under which if the policyholder dies, he is not provided any kind of insurance benefit.
If the death of the policyholder occurs due to some of the reasons mentioned below, then he will not be provided with the benefit under the term policy-
- driving under the influence of alcohol or drugs,
- Participating in illegal activity with criminal intent,
- Participation in hazardous activities sports .
- Death from Participating in Criminal Activities:
Death caused during criminal activities is not covered in term insurance policy. If the policyholder is found involved in any criminal activity and dies during this, then he will not be provided with any benefit under the term insurance policy.
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- Pre-existing Medical Conditions:
Term insurance plans give you the option of adding additional coverage through riders like critical illness cover and terminal illness cover. When these riders are added, insurance companies add a ‘waiting period’ to the policy. Only after the waiting period is over, he can get benefit from the riders like Critical Illness Cover and Terminal Illness Cover etc. linked under this policy.
You have to wait for a certain period of time specified by the waiting period. In case of critical illnesses, this waiting period can range from a few months to even a few years.
- Death due to Intoxication:
If the death of the policyholder is due to any type of intoxication such as drugs or excessive consumption of alcohol, then it is not covered under the term insurance policy. The insurance company will not be liable to provide insurance benefits for any death caused under this.
- Conditions regarding Lifestyle:
In case of any kind of death related to lifestyle, no benefit is provided under the term insurance policy. For example, if the insured person is a smoker and his death occurs due to smoking, then it is not covered under the term insurance policy.
If the smoking habit is not declared by the insured at the time of purchase of the policy, the insurance company reserves the right to reject the claim for insurance in case the death of the insured is related to smoking.
- Fraud:
If any kind of fraudulent behavior etc. is done by the policyholder then the insurance company has every right to cancel the term insurance policy immediately by paying the surrender value.