Life Insurance: Deepak Sood

There are so many riders available on life covers. How do I decide which ones to buy?
Rider benefits enhanced coverage under life insurance, at an extra cost. These are, generally, classified as health-related (critical illness), accident-related (accident cover riders), disability-related (total and partial permanent disability) and others (premium waiver).

Accidental death riders offer the enhanced sum assured in case of death due to an accident. Dismemberment riders pay on loss of body part(s) in an accident. Critical illness riders pay the sum assured on being diagnosed with pre-defined illnesses. They provide flexibility and are comparatively cheaper as policy-servicing charges are not loaded.

A rider should be selected based on the needs of an individual and the risk he/she would like protection for. However, in case where the life assured does not have his/her own income and the premium is to be paid by the proposer, it is advisable to opt for the premium waiver benefit rider so the policy does not become a liability on death of the proposer.

Are insurance agents bound to show benefit illustrations to customers at the time of selling investment products? If yes, can one take action against an agent who does not do so?
Yes, in unit-linked life insurance plans (Ulips), it is mandatory for the salesman to provide a client specific benefit illustration, which clearly highlights the premiums paid, charges deducted and the benefits under different circumstances like death, surrender and survival. Such illustration should also provide the investment return net of charges under six and 10 per cent a year gross investment return scenarios. A Ulip can be issued only if a copy of the benefit illustration duly signed by the client is attached with the proposal form.

A benefit illustration helps the customer to understand the benefits available under the plan and to compare the effect of charges made by the company on investment return under similar plans of same or different companies in the market.

In case the illustration is not provided, one can approach various grievance redressal mechanisms available with the company and the regulator to take appropriate action.

In a traditional life insurance plan, it is not mandatory to provide the illustration along with the application form. However, as a good business practice, most insurance companies provide one to customers.

The writer is the managing director and CEO of Future Generali Life Insurance. The views expressed are his own. Send your queries to yourmoney@bsmail.in