How to decide coverage for term life insurance policy? Know these important factors suggested by expert

The COVID-19 pandemic has taught importance for preparations and the preparations for medical emergencies. Insurance providers are focusing on improving access and acceptance of the COVID-19 vaccine. Many are offering COVID health insurance cover in their plans.

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In the midst of this situation, people still have doubts regarding term insurance and its coverage. By purchasing a life insurance policy, particularly a term policy, one can ensure financial security for the loved ones even in case the person is not present, said Ankit Agrawal CEO and Co-Founder, Insurance Dekho.

Agrawal said, "You can even get coverage for a large number of critical illnesses if you make the right changes to your term insurance policy. As our lifestyles change and health concerns take precedence, such coverage can be a huge benefit for individuals and families across the country."

Agrawal further explained that the cover for a term insurance policy must be formed on the basis of an individual's annual income. One should opt for a cover that is at least 10 times the annual salary. With the uncertainties increasing, some people also suggest making it 20 times. One should always be cognizant of their requirement and select the plans wisely.

The individuals interested for term insurance must note that the IRDAI has recently issued new guidelines for medical insurance providers with effect from October 1. The changes are intended to make health insurance plans more comprehensive – covering more treatments – and simpler.

Here are certain points that people should keep in mind before buying a term insurance:

1) Customer-Centred Solutions: Insurance companies used to take a one-size-fits-all approach, but no longer. The customers are more aware than ever before, and they expect solutions that are tailored to their specific needs. To meet customer expectations, insurers are offering customized policies. This is one of the term insurance trends we will see in the future.
Enhanced Claim Settlement: In addition to digitalization and customer-centric solutions, insurance companies will see an improved claim settlement mechanism in 2020. Claims can now be filed more quickly, and policyholders can simply upload the necessary documents. Insurers can use this to improve their efficiency and settle claims more quickly and efficiently.
The industry’s settlement ratio reduced to 96.76% in 2019-20 from 97.64% in 2018-19 and the repudiation ratio increased to 1.02% compared to that of 0.74% in 2018-19

2) Cashless Claim Settlement: The insurer straight pays to the hospital subject to the amount of the claim. One will need to pay only in case of co-payments or sub-limit clauses that you have decided during the plan purchase. Also with Reimbursement Claim Settlement Method, people have the option to pay for the treatment at the hospital and get it reimbursed later on from the insurance provider subject to the submission of all treatment related original bills, reports, and discharge summary maximum up to sum insured of the policy.

3) Increased Benefits & Options: As the number of potential policyholders grows, so will competition among insurers. As a result, various types of policies, as well as riders and special benefits, are introduced. Insurance companies will try to outperform the competition by providing additional benefits to new customers.

4) Waiting Period for Coronavirus: With the increasing cases from 1st to 2nd wave of corona-virus health awareness has been increased and many people are buying health retail insurance plans and covid specific retail plans to avail of coverage benefits like hospitalization and treatment under these plans, the insured is required to finish a waiting period of up to 30 days.
The Corona Kavach Policy is available with a policy term of three and half months six and half months, and nine and a half months including a waiting period. Usually, 15 days waiting period is applicable under the policies.

5) No Claim Bonus During Covid: No claim bonus or Cumulative Bonus in health insurance is bonus money added in the sum insured for every claim free year. It is like a reward that policyholder receives for not claiming on his health insurance. Eventually, this enables maximum coverage with an increased sum insured amount every year. Moreover, the prospect of portability applies to No claim bonus and help to cope up with health claims to insured during Covid where insured have more serious condition during Covid times.

Agrawal feels that under certain conditions, insurance companies will be required to settle or reject a claim within 30 days of its receipt. If an insurer fails to decide on a claim within this time frame, it must pay interest at a rate of 2 per cent above the applicable bank rate on the amount owed to the policyholder. This means that if the claim is delayed, the insurance company will be required to pay an additional amount in addition to the claim amount.