Life Insurance: Deepak Sood
I have a Rs 50-lakh life cover from a public sector insurer. I would like to increase it to Rs 1 crore. How do I do it? I am 46 years old. What should be the proper risk coverage for me?
Increase in life cover under an existing policy is generally not allowed. However, you can buy another policy of Rs 50 lakh from any life insurer offering the best rate. Please note that acceptance of this cover would be subject to financial and medical underwriting. There are online term plans also on offer, to be taken through your agent or the insurer’s website. For the purpose of risk cover, it would be better to opt for a term cover.
In the absence of more details it would be difficult to suggest an appropriate risk coverage. It is worked out depending on your current income, your total income earning capacity (popularly known as human life value, dependant(s), age and lifestyle. In your case, it may be worked out taking present value of the next 15 to 20 years of your net of tax income less your own future expenses. We suggest you meet an insurance advisor for more guidance.
I have applied for an online term policy with a private insurer. I was asked to pay the premium. However, the company claims it received the money the next day when I had moved to the next age bracket and asked me to pay the higher premium. I requested them to back date the policy by a day and not change the premium. But they refused. I would like to know if back dating is permissible. Are there any Irda guideline on it?
Backdating is allowed under traditional policies, including term plans. We feel your request is genuine and should be considered, if the product conditions do not prohibit the same.
You can approach the company through their grievance redressal department. Backdating norms of an insurer is as per its underwriting policy in consultation with its reinsurers. There are no specific norms issued by Irda (Insurance Regulatory and Development Authority) on this issue.
Which of the two is better - a term plan or return on premium plan - and why? What are the main differentiating points?
In a term plan, life risk is covered during the period of coverage and no amount is payable on survival till the end of the term. In case of a term plan with return of premium an amount equal to total premiums paid is payable on survival till maturity date of the policy.
It is quite obvious that the premiums payable under a return of premium plan would be higher than the premiums payable under a term plan. If you want risk cover at the lowest premium, you may buy a term plan. But if you are looking for return of premium, if you survive till the end of the term, then you may purchase a return of premium plan.
While health insurance companies have an entry age barrier, do life insurers also have any such rule? Why? Is there a minimum entry age, too?
All life insurance plans generally have a minimum and maximum age as extent of life insurance cover is allowed depending on current / future earning capacity of the person to be insured, number of dependants and so on. Term plans are generally allowed from age 18 onwards, though savings related plans are offered to minor lives also.
The writer is the MD & CEO of Future Generali Life Insurance.
Views expressed are his own.
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