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Everything about Simplified Issue Life Insurance

dateKnowledge Centre Team dateJune 01, 2021 views232 Views
Simplified Issue Life Insurance | Term Life Insurance Plan | Term Plans Online

Buying a life insurance policy is a wise financial decision as it provides financial security to your family when you are not around. However, you might be in urgent need of a life insurance, and a medical test may take a lot of your time. People who want to avoid the time-consuming process of answering a medical questionnaire as well as medical tests may opt for simplified issue life insurance policy.

The main feature of such a life insurance plan is it requires minimal health information from an applicant while completely avoiding any medical exams.

What is a Simplified Issue Life Insurance?

Simplified Issue Life Insurance is a life insurance plan that you can get approved with minimum health tests. All other life insurance plans require you to undergo medical tests that are mandatory. This type of insurance plan is tailored for people who need a life insurance quickly and people who don't want to take a medical exam.

Why do you Need a Simplified Issue Life Insurance?

Insurance companies conventionally use lengthy lists of questions concerning the applicant's physical health, mental health, and medical history. They also prescribe various medical tests to verify the authenticity of the information that the applicant provides. This process can take anywhere from 45 to 60 days in most cases, sometimes even more if the insurer wants additional information.

Know if you can buy a life insurance plan without a medical exam in INDIA.

However, it didn't take long for insurance companies to realize people's aversion to going through this lengthy process to obtain life insurance. Simplified Issue Life Insurance was introduced as a way of simplifying the process.

How does the Simplified Issue Life Insurance Work?

Under this simplified process, applicants must answer only a few questions about their health. They don't need to take a medical exam. Insurance providers then contact third-party sources to obtain additional information about the applicants, like driving records and drug history.

Advantages of Simplified Issue Life Insurance

The main advantages of a simplified issue life insurance are as follows:

  • It doesn't require a medical test.
  • Insurance starts as soon as the applicant's document is approved.
  • Less time consuming as compared to standard life insurance plans.

Drawbacks of Simplified Issue Life Insurance

Like every insurance plan, a Simplified issue Life Insurance has a few drawbacks too. Let's discuss them in brief.

  • Conditional Death Benefits

    Some simplified issue life insurance policies will pay your beneficiaries only if the policy has been two years old before the death of the policyholder. If the insured person dies within two years of purchasing the policy, the beneficiaries will receive the premium amount that the insured had paid.

  • More Expensive

    A simplified issue life insurance policy is more expensive than traditional life insurance schemes. This is because lesser information from applicants renders the job of classifying them difficult.

  • Limited Coverage

    Owing to limited information from applicants about their health, insurers hesitate to sell simplified issue policies that provide large coverage amounts.

When should you Apply for a Simplified Issue Life Insurance?

Keeping in mind the drawbacks, choosing a Simplified Issue Life Insurance still makes sense in the following cases:

  • When you want to avoid a medical test but need life insurance.
  • When you need life insurance but are not certain about qualifying for traditional policies.
  • When you need a life insurance policy after your term insurance has matured, you need time to figure out what to do next.

In India, Term insurance plans without medical tests can be described as a variation of the Simplified Issue Life Insurance policy. Term Insurance policies are insurance schemes that ensure sufficient financial aid to sustain your family in the event of your death. These policies are purchased for a specified period. They are relatively cheaper but do not provide maturity benefits.

If a policyholder wants maturity benefits, they can choose Term Return of Premium (TROP) plans. These plans differ slightly from conventional term plans. They give maturity benefits to a policyholder by paying back the total premium amount paid by them.

This happens only when the term life insurance continues until the policy term's end and the policyholder is alive. According to the policyholder's needs, they can choose a term life insurance plan for 10, 20, 30 years.

However, it is advised that before you opt for a life insurance plan, you should take your time to research and compare various insurance schemes provided by different insurance companies. Accurate knowledge through proper research can safeguard you and your family from financial perils.

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Frequently Asked Questions (FAQs) for Life Insurance

The premium is one of the most important factors to consider before buying a policy. Many people buy a life insurance policy with a high sum assured but are unable to process the premiums for the entire premium payment tenure. You can get a better idea of the premium outgo with the premium calculator available in the 'Tools and Calculator' section of www.canarahsbclife.com.

Life insurance plans come with several riders which increase the efficiency of the policy for the buyer. For instance, if you have a history of terminal illness in your family it would be advisable to opt for terminal illness rider with your term insurance. Riders or add-ons help in customising the standard policy benefits for the requirement of different families. The iSelect term insurance plan comes with a built-in cover for terminal illness, and option for protection against accidental death or disability. You can also opt to cover your spouse's life under the same policy by paying an additional premium.

Insurance companies calculate the premiums based on several factors such as age, gender and occupation.

Age:It is one of the biggest factors that influence life insurance premiums. Premiums tend to be low when the life insured is younger as the chances of contracting diseases is low. Young people also opt for policies with longer tenures and pay premiums for a longer duration, which makes the policy cheaper for young people.

Gender:The insurance premium for women is generally lower when it comes to life insurance plans. Women live longer and pose a lesser risk of a claim leading to lower premiums for them.

Lifestyle habits:The premiums for people who smoke or drink is always higher due to higher health risks.

Policy term:Policy terms are also taken into consideration by insurers while deciding the premium amount. Policies with longer tenure are cheaper as compared to short-duration policies.

Mode of purchase: The platform that you use to buy the policy also determines how much you will have to pay for the plan. People who buy life insurance policies online have to pay lower premiums as compared to offline policies.

Occupation:The nature of your work is an important factor that influences the premium amount. Certain occupations like shipping and mining are considered more dangerous as compared to jobs in services industries. The insurance premium rises with the risk profile.

Processing life insurance claim is a transparent and smooth process with Canara HSBC Oriental Bank of Commerce Life Insurance.

In case of the death of the life insured, the nominee will have to intimate the company by filling a Death Claim Form and sending it to the nearest branch office.

Once the form is received, the claim is registered by the insurer.

After the registration of the claim, the company will send the claims pack along with the related forms such as physicianâ s statement form and employer certificate that need to be filled.

Along with the duly filled forms a few documents such as original [policy document, death certificate, copy of bank passbook, hospital or treatment records, photo identification and address proof have to be provided.

The claim is processed on the submission of relevant documents. Once the documents are verified, the claim amount is released post all due diligence.

Household expenses rise with age. The cost of children's education increases along with other lifestyle expenses. The iSelect term plan offers an option to increase the cover according to the life stage. If opted, the insurance cover increases by 25% at every 5-year terminal till the 20th policy year.

Even though a life insurance policy is bought to protect your family in your absence. There are chances of the claim being rejected due to several factors.

False information: If the policyholder provides false information or conceals important information while buying the policy, the insurer has the right to reject the claim after his/her death.

Type of death: Deaths due to suicide in first policy year, intoxication or pre-existing disease is not covered under life insurance.

Premium payment: The payment of premiums on time is of utmost important to avail the benefits of life insurance. Life insurance policy may lapse on the failure to pay the premiums

Nominee details: An insurance company can put the claim on hold if the nominee details have not been filled or not been updated by the policyholder.

Suicide: If the life insured commits suicide within 12 months of buying the policy, the insurance companies generally pay 80% of the total premiums paid.

Buying life insurance online is not only safe but a better option. Online life insurance policies have lower premiums and the individual is not required to visit the insurer's branch or a bank. Online insurance policies also offer higher benefits. Customers should, however, buy online policies only from credible insurers and should check for SSL certificate on the website to ensure that the website is legitimate.

The cost of life insurance policies varies depending on factors like age, gender and occupation. The average cost of life insurance plans, especially term plans, is very low compared to the amount of coverage offered.

An individual is allowed to have multiple life insurance policies. People opt for more than one policy to increase the cover or avoid claim rejection. In case of multiple policies, even if the claim is rejected by one insurer, the beneficiaries may receive the benefit from a different insurer.

Life insurance policies are of different types. In the case of unit-linked or endowment policies the policyholder receives the maturity benefit at the end of the policy term. However, in the case of term insurance plans, there are no maturity benefits. The death benefit is only paid out after the death of the life insured.

When you buy life insurance, the insurance company asks for the nominee details. Only the person named as the nominee in the policy can cash out a life insurance policy in case of death of life insured.

A life insurance policy is generally taken for a specified period. After the policy duration of a term plan gets over, the policy simply terminates and ceases to exist. However, in the case of unit-linked plans or endowment, you can use the policy as a tool for retirement planning and the accumulated corpus is used by the insurer to pay you monthly amounts for your entire life.

If a policyholder purchases a term plan for 25 years and dies during the policy term. The family receives the death benefit. In the case of iSelect term plan, the policy provides four payment options to the beneficiaries. If the regular payment options are chosen the policy works as a source of regular income.

It is a popular misconception that life insurance is only for accidental deaths. A term life insurance plan like iSelect also covers terminal disease along with death. A terminal illness cover is important as health insurance pays only for the cost of treatment and hospitalization, but a terminal illness cover pays you a lump-sum amount which takes care of other expenses. On the other hand, unit-linked policies such as Invest 4G cover death and also provide decent returns for other financial goals such as buying a house of child's education.

It is ideal to buy life insurance in your early 20s because it’s is the time when people have just started with their professional life and so there are lesser responsibilities and financial liabilities to take care of. Also, if you buy life insurance at this age, you will be paying relatively lower insurance premiums since it’s a due fact that mortality rate in case of young people is low. And that is why insurance companies offer lesser premium rates to younger people as they think that they are most likely to be fit and healthier with less chances of filing a claim in future.

Once you have cancelled your life insurance policy, you will instantly lose your life insurance cover. Afterwards, your insurance company will get in touch with you and ask for valid reasons regarding the cancellation of your policy. In case you cancel your life insurance policy within the grace period, i.e. 15 to 30 days, depending on your insurer, then insurance company will reimburse the premium amount paid by you. But, no refunds will be paid to you if the policy is cancelled after the grace period.

Yes, you can take life insurance under Married Women’s Property (MWP) Act, 1984 only if you are a married man and a resident of India. Buying a life insurance plan under MWP Act would be helpful in saving your family’s financial well-being when you are not around. As per this policy, only wife and children would be eligible to receive the death benefits. You can also buy a policy if you are a widower or a divorcee. However, in that case, you can give your child’s name as your beneficiary. It is very simple to buy a life plan under MWP Act. All you need to do is to fill up an MWP addendum while purchasing an insurance policy.

Yes, there are different payment options for you to pay premiums. Here’re some of them

    1. Regular premium payment option – This premium payment option allows you to pay premiums equal to your policy term either monthly, quarterly, half yearly or annually.

    2. Single payment option – Through this premium payment option, you can pay the lump-sum amount in one single payment.

    3. Limited payment option -In this premium payment option, you can pay premiums for a specific period of time less than policy term either monthly, quarterly, half yearly or annually, but benefits of insurance can be enjoyed for a longer period of time.

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