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5 Common Life Insurance FAQs and Answers

  • 1st Oct 2019
  • 285
5 Common Life Insurance FAQs and Answers

A term plan is an insurance cover, which provides financial security to your loved ones in case of an untoward incident. However, many policyholders have numerous queries about insurance and they are unable to make a decision due to a lack of knowledge. Explained ahead are some common insurance queries that you may have in mind along with the answers for these questions.

Five common insurance questions answered

Here are the five most common insurance questions answered for you.

  • What will happen in case of lapse of policy?
  • If you are wondering what happens if life insurance policy lapses, your answer is here. Your insurance policy lapses when you fail to pay the premium even after the grace period is provided to you. If the policy lapses, all the terms of the contract will be void and the nominee will not receive any benefit. However, it does not mean that your policy is cancelled. You can revive the policy within a period of five years from the date when the last premium was due. You will have to pay all the outstanding premiums and interest to revive the policy.

  • What happens if I discontinue the premiums?
  • If for any reason, you discontinue paying the premium, you will ask yourself the question “what happens if you stop paying online term plan premiums?” In this case, the policy will lapse after the end of your grace period. You have two options here. One is to revive the policy by paying the premium amount with a penalty or to surrender it. You can only revive the policy within five years and if you plan to surrender it, nothing will be paid to you if the policy has been in force for less than three years.

  • Is there a guaranteed return in case of maturity of my insurance policy?
  • Your guaranteed return will be based on the plan. In a term insurance plan, there are no maturity benefits. Only death benefits are applicable. In case of other policies, the company will pay a lump sum, which includes the sum assured and the accrued bonus as a maturity amount.

  • Are there charges on insurance policies?
  • There are various charges on your insurance premium. One is a mortality charge, which is deducted from the premium to provide the death benefit to the nominees. Another is a premium allocation charge, which is deducted from the premium for paying the underwriting expenses and commission to the agents. The third expense is the fund management charge, which is applicable in the case of Unit-Linked Insurance Plans (ULIPs). Lastly, there is a policy administration charge, which is an expense deducted on a timely basis for the costs incurred by the insurer to maintain and service your policy.

  • Is it possible to discontinue the policy?

  • Yes, you can discontinue the policy and there are different ways to do it. If you do it within the lock-in period, there are no charges applicable to it. If you choose to discontinue the policy before a period of three years,the premium paid by you will be forfeited. Alternatively, after making regular premium payments for three years and then cancelling the insurance policy will make you eligible for the surrender value applicable at that time.

    Now that you have all the online term plan questions answered for you, make a wise decision and invest in the right insurance plan.

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