What's There in the Fine Print of Your Life Insurance Policy?
Buying a life insurance cover is one of the smartest financial decisions of life. You can avail the benefit of very low insurance premiums if you buy at an early age. Also, life insurance policies may have added benefits like critical (life threatening) illness and accidental covers. After buying the policy, you receive the policy documents with a quote stating:
“Please check the life insurance policy details in the document. You can return the policy with a full premium refund within the free look period of 15 (30 in some cases) days after receiving the documents.”
The policy details in the document not only contain your name and personal details it also contains the terms and conditions of the claim settlement. Although, such important information is often provided in very small fonts, and quite challenging to read. So, for your easy understanding here we summarise the life insurance policy details that are finely printed in the policy document:
The Conditions Where No Claim Will be Paid
These are usually called exclusions. These list the conditions when the insurer will not pay the death claim. The exclusions include conditions of death or accident where the insurer will not consider the claim. Also, while buying the policy, you need to ensure that you provide the insurer correct and updated information about the following:
- Existing Diseases
- Occupation details
- Physical Conditions
- Previous Proposals
- Existing Life Insurance Policies
These factors are considered vital (relevant factors) for life insurance policies. Even though life insurer can only reject a policy for wrong information in the first three years; it is better to provide correct information.
The Benefit Amount Payable Under Death Benefit
The life insurance policies’ primary objective to cover your loved ones in the event of your unfortunate demise. Thus, the death claim payable under the policy is mentioned in a separate section. Depending on the type of policy, it may include any or both of the following:
- 100% of Sum Assured under the policy
- 100% (or more) of the total premium paid under the policy
Whenever both conditions apply, usually, the insurers pay the higher amount out of the two.
Other benefits Inbuilt or Bought as Rider with the Policy
Life insurance policies often come with added benefits. For example, accidental death and disability benefit, double accidental benefit, critical (terminal) illness benefit or premium waiver benefit.