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Popularly asked questions about Life Insurance – Part I

Popularly asked questions about Life Insurance – Part I

Life insurance Plans

Most people misinterpret life insurance, or have limited information about it. Well, insurance in general, can get a little bit confusing and overwhelming because, let’s face it: No one wants to think about dying. However, it is never too early or too late to think about the one’s you love. You have to plan in advance for the future of the people who will be the most affected by your absence. Life insurance helps you manage your financial obligations. While it can be hard to talk about something you don’t quite understand, it is advised you do. To help you with your queries and doubts, we have listed the answers to most popular questions people ask about life insurance, and are often uncomfortable to ask.

1. I am perfectly healthy; do I still need to have a Life Insurance?

Life can be uncertain and the occurrence of corona-virus has stated it well enough. There’s no right age or time to buy a life insurance policy and it should be done as soon as you are able to. Here are the four main reasons to purchase a term plan life insurance:

  • Managing Final Expenses - Medical bills, funeral expenses, and basic living costs for those financially dependent on you can add up quickly and a life insurance policy helps your family handle these expenses when times are tough.
  • Mortgage Protection - In case of an unfortunate event, the payout received from a life insurance policy may be used to pay off outstanding balances on mortgages.
  • College Funding - In case of an unfortunate event, your life insurance policy can help to pay for your children’s education.
  • Income Replacement - The death benefit paid to a nominee can help maintain the lifestyle to which they are accustomed.

2. What if I have a life insurance through my employer already?

Most employers do offer coverage but the odds are that the coverage is inadequate. And even if you are offered the best plan ever, you’ll lose it once you stop working there. Assess your coverage needs and treat your employer’s plan as a supplement.

3. Do I have to take a medical exam to get a life insurance policy?

Yes, a medical exam is almost always a part of the life insurance policy buying process. There might be a few no-medical exam life insurance policies but they typically offer lower coverage amounts and higher prices than comparable policies that involve the full underwriting process. Medical exams are important for an insurance company to get an idea of how risky you are to insure. Your health, lifestyle habits and age are some of the most important factors that help determine your premium amount.

4. Would quitting smoking help with my premiums and coverage amount?

Quitting smoking definitely helps improve the coverage offered and the premiums to be paid. However, quitting smoking right before a paramedical exam won’t help as much because signs of nicotine stay in your blood for over a week and in your urine for almost a month. In addition, a history of smoking can still affect the costs; how much depends on the date of your last cigarette and how often you’ve been smoking them.

5. What is an underwriter?

Underwriting is the process of evaluating the risk of insuring a person to determine if it is appropriate to take the chance on providing an insurance cover. After determining the risk, the underwriter sets a price and establishes the insurance premium that will be charged in exchange for the risk cover being offered.

6. What happens if I lie to the underwriter and they find out?

There can be several repercussions of lying to the underwriter at the time of filing the policy document depending on the severity of the lie. Let us look at them from a best to the worst-case scenarios:

  • The least that can happen is that all of the quotes you’ve received so far will be straight-up wrong and you’ll get offered a much higher premium.
  • In a bad-case scenario, you may be denied coverage or if the lie was discovered after the signing of policy document, the policy may get canceled.
  • In the worst-case scenario, after you’ve received the policy documents, your death benefit won’t get paid out.

Read part 2 of the popularly asked question series and have all your questions answered before you invest in a policy. With its unparalleled benefits and importance a life insurance plan should be a quintessential component of your financial portfolio.

Speak to an insurance specialist now!

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