TERM INSURANCE FOR SEAFARERS
Last updated on March 10th, 2023 at 10:43 am
Term insurance for seafarers is a life insurance policy that provides coverage for a certain period or a specified “term” of years. If the insured dies during the period specified in the policy and the policy are active or in force, a death benefit will be paid. It is said to be the cheapest life insurance in the market, providing a high-value life cover with an affordable premium.
Why term insurance for seafarers
Seafarers work in a dangerous environment on ships. Any minor mistake onboard can lead to fatal accidents or death. Shipping companies provide insurance benefits to sailors while sailing, but they are loaded with stringent clauses and follow corruption channels before reaching the beneficiaries. At the same time, 99% of companies do not insure seafarers when they are offboarded. There was a case in which a captain died on board due to medical reasons arising from food. He was on his first contract as a master and was insured by the company he was sailing for. But the insurance offered by the shipping company exposed some harsh realities. Captain’s wife, who was the beneficiary in the contract, received only an amount of 20 lakhs involving large bribes. Since the insurance amount of the company comes from the labor court, the corruption involved in the process is disheartening. To avoid risks of such kind, Term insurance for seafarers with small premium plans while covering a large amount to be provided to the beneficiaries in the future.
When to take term Insurance
Recently, a case of a young marine officer who died in an accident was in the spotlight. He was returning after completing a course when his car met an unfortunate accident leading to the on-spot death of the driver and officer. A very young officer who got married recently was the only earning member of his family. This incident shattered his family as they were left with no finances to support themselves. Suppose he had taken term insurance at the beginning of his career at a mere premium of Rs 3000-4000. In that case, the vulnerable financial condition of his family after his unforeseen death could have been avoided. Term insurance is beneficial when taken early in the career. A person investing in term insurance at the age of 35-36 years will have to pay a premium of Rs18,000. Whereas if a seafarer invests in such insurance early in their career, not only do they receive a small premium amount ranging between Rs3000-4000 but also security to his/her family’s financial future.
How much amount to take
Today 1 crore insurance might be a big deal for many of us. But after 10 years, its value will decrease. Your Insurance plan should have substantial coverage that can guarantee a smooth financial status for the next 10 years to your family after you are gone. Insurance companies calculate the premium cost based on a salary structure. Premium is the amount paid to get insurance every year. If you are a junior engineer, 22-25years of age, your premium will fall between 3000 – 4000 when you invest Rs 1 crore. In contrast, the premium will range from Rs 5-6 thousand if the investment is for two crores.
On the other hand, if you do term insurance of 1 crore at the age of 36, the same premium goes up to 18,000 per year. A seafarer should not invest in long-term expensive commitments due to their sporadic income flow. Hence, it is always better to go for an insurance plan early in life as the liabilities are less and the premium paid is affordable.
What to remember before taking Term Insurance
Don’t add too many riders/clauses.
It is not necessary initially to invest in aggregators while taking a standard term plan. This will double the premium amount. Many clauses, such as death by accident, and critical illness, are covered in the basic plan structure. Once you get more informed about the insurance planning and feel the need to add a rider to your plan, you can always take another insurance term with the riders you prefer.
Take the cheapest premium.
Many reputed websites like Policybazaar and 5PaisaInsurance provide a good comparative online study of different insurance companies. If you see three companies with premiums of – Rs 16000, Rs 17000, and Rs 18000, it is always advisable to take the cheapest plan available. The reason is it is not important that you will claim the insurance amount in the future. The Supreme Court has ruled that if a person has paid their premium for three years, no one can withhold their claim. Hence, investing in the right insurance company is important, not an expensive plan.
Remember to make separate declarations.
It is important to let your insurance company know that you work as a seafarer and come under the category of NRI. This will help you pay your premiums, as they will be deducted from your NRE/NRO account. Before taking the term insurance, informing your insurance company that you will be working in a dangerous environment is necessary. There are some specific forms for seafarers that one needs to fill in which they mention that you are an NRI working on merchant ships with hazardous environments. Always mention the types of ships you are sailing, and also specify the hazards associated. Sometimes the insurance agent says these forms are not required; still, you should insist and fill those forms.
Don’t tell lies while declaring in your term insurance plans.
If you smoke, mention that you smoke. If you’re an occasional/regular drinker, please mention that in the form. If you have any past medical history, please mention that in your declaration form too. Don’t hide anything; it might increase your premium a little bit, but your family will not be struggling to claim the amount after you are gone.
Keep your documents organized.
All the paperwork that comes with insurance planning can get a lot hectic. To make the process less tiring, keeping your documents well organized and in one place is always advisable. Keep copies of them, and make sure to inform your family members about them. Term insurance is for your family after you are gone, so they must know the details to claim the amount in the future.
Term insurance for seafarers is a must, as life is filled with uncertainty. Being the sole earner in your family, you do not wish to leave them economically distressed. Hence, invest in affordable term plans. Remember, insurance is only for risk coverage and not for profit making.