Life Insurance: Deepak Sood

My son is four years old. Is it advisable to take a pure life cover for him?
Pure life policies are normally offered to earning majors only. As your son is a minor and non-earning, these plans may not be available for his life. In your case, I am not clear why insurance cover is needed on the life of the child.

In case it is for the benefit of the child and securing his future, it is advisable to have the cover on your own life and make your son the nominee in the policy. Alternatively, you can avail of the savings-related child benefit plans offered by most life insurance companies. These provide insurance cover on minor lives, in addition to savings benefits.

A relative is struggling to get the life claim after the death of his uncle. Are there guidelines pertaining to claim processing which companies must adhere to? In how many days can one expect to get the claimed amount?
Normally, insurance companies settle claims at the earliest. They are mandated to inform the claimants of all the requirements, to settle a claim within 15 days of receiving the intimation. A claim should be paid or disputed within 30 days from the date of receiving all the requirements intimated to the claimant. In normal course, claims where the policy has completed more than two years are settled within a week or ten days after receiving all the required documents. Claims occurring within two years from the date of commencement/revival of the policy are called early claims. Keeping the interest of other policyholders in mind, insurance companies investigate early claims according to the provisions of Section 45 of the Insurance Act, 1938. Such investigation is done to ensure the genuineness of the claim and may take up to six months.

Some life policies offer a special feature called benefit of indexation. What exactly does this mean?
Life cover is required to compensate the loss of income to the beneficiary owing to the death of the earning member. The quantum of loss rises due to the increasing income/costs because of salary/price inflation. However, the covers generally offered by life companies remain constant, creating a shortfall in compensation. To overcome this issue, insurance companies sometimes offer indexation benefit for the life cover in their policies. Such benefit is generally offered in case of pure term plans, where the cover (and, hence, the premium) increases/decreases based on a pre-stated index, usually the retail/consumer price index.

Further, such increases are generally offered automatically, that is, without any health declaration or check-ups. To avoid the complexity of indexation, insurance companies generally offer increasing cover, say an increase in sum assured of five per cent every year, which is an attempt to mirror the effect of indexation and inflation.

The writer is managing director and chief executive officer at Future Generali Life Insurance. The views expressed are personal. You can mail your queries to yourmoney@bsmail.in