As the reader knows, typical term insurance plans are pure life plans. The pay-outs are given to the nominee on a single condition, that is, if the policyholder passes away while the policy is active. This means that if you own a term plan, claim can only be filed if you are no longer with your family.
Due to this, it is of utmost importance to ensure the information given in the paperwork when you buy a term plan is absolutely accurate and there are no material facts that you have not disclosed. This will make the claim process smooth and the pay-out of the term plan will be a support to your family during a tough time instead of being another thing to worry about.
So, what are the typical things you need to ensure are properly documented in your insurance papers?
- Medical history and habits – Being 100% transparent about your health, your medical history, and habits like smoking and drinking is of utmost importance.
- Relevant hobbies – If you engage in adventure sports like trekking, mountaineering, rappelling, or others, this needs to be disclosed to the insurer.
- Occupational hazards – The insurer takes into consideration the occupational hazards too when they underwrite policies (determine risks and decide premiums). Be sure to not hide anything.
When you sign on the dotted line on a term insurance policy, you are declaring that you have disclosed everything to the best of your knowledge. If something is discovered by the insurer later or during a claim scenario that contradicts your disclosures, claim will be rejected.
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