Validity of Term Plan after quitting the job

POSTED BY INM ON April 1, 2013 10:11 pm COMMENTS (10)

Hi, I am a 30 years old married female working in public sector bank with salary around 4 lacs PA. I am planning to take a pure online term plan for 50 lacs of Aviva icare or HDFC Click2Protect for 30 years term. Now my query is :
1. If I happen to leave the job after one or two years after taking the term plan, because of personal reasons and carry on as a housewife, what happens to my term policy.? does it get lapsed even if I continue to pay the premium on time.
As I am aware that term plan is given only to earning members, will I be able to continue my policy even after leaving my job. Do I need to inform the insurance company when I leave my job?
Thanks for your responses.

10 replies on this article “Validity of Term Plan after quitting the job”

  1. INM says:

    Thanks a lot FFC, Ashal and Manish for your insight.

    Now i get the point that even if a person quits his job after taking a term plan, the policy stays valid as long as the premium is paid on time.

    The statement from Manish saying that Term plan is all about CURRENT DATA is assuring and clears my doubt reg informing the ins. company in the eventuality of quitting job.

    Thanks again 🙂

  2. Dear FFC, I’m not sure of exact details but housewives can avail insurance of 50% sum assured that the husband is having. At least combo policies are offering such insurance. Can’t say for pure term cover.

    Thanks

    Ashal

  3. Dear FFc, thanks for reminding that old article. Actually the article in question is discussing the case before purchase of term plan. here in the ongoing query, we are discussing the case where the policy is already running & the insured life is no more earning an income.

    Just imagine this simple situation – a normal person – working – purchase term plan – stop working & opt for a education prog. enrollment for next 2-3 years (MBA or any other thing) – no working, hence no income – but paying prem. for term plan – what ‘ll be the situation here is same for the query under discussion.

    Thanks

    Ashal

    1. Dear Ashal,

      I know the article has nothing to do with the query. Just wanted to point out that although housewives have a good enough HLV insurers don’t want to take them for clients. Don’t know what IRDA’s stance on this.

      Financial planners all over the world recommend term life for housewife and it being offered in the US.

  4. There is no need to inform the company that you left your job , Term plan is all about the CURRENT DATA , what happens in future is all covered in term plan , thats why it covers the uncertainity .

    Dont worry … just go ahead ! .

  5. Dear INM, after the start of policy, if you stop working later on but continue to pay prem. Insurance co. can not deny claim (if happens). you need not to inform for your income status.

    Yes Term Plans are given only for earning lives but this income is checked only at the time of purchase. After purchase, the life in question may stop working & earning. As simple as that. 🙂

    Thanks

    Ashal

  6. Indranath Mukherjee says:

    I know the fact that term plan is given only to earning members. In fact the document requirement includes the earning proof eg payslip, form 16, itr copy etc to underwrite and come to the optimal sum assured.

    Pls correct me if I am missing something.

    1. income proof in needed to ensure an individual is not over insured.

      In general a housewife has a ‘human life value’ associated with her and can get a term plan (for a much lower sum assured of course). This is of course not relevant to your main question though.

  7. It is not true that term plan is given only to earning members. Each life has a value.

    If you leave your job your policy will not lapse or become invalid.

    There is not need to inform the insurer about job status after you get the policy.

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