Tuesday, 19 March 2019

LIFE INSURANCE: Discrepancy in health leads to increase in term plan premiums

I have been diagnosed with Diabetes two months back. Post that, I applied for a term plan. The initial premium while applying was Rs 7,500 quarterly for 10 years for a 40 year term, but post the medical test, the premium has been revised to Rs 15,500. Should I cancel the current proposal and change the insurance company to compare premium? Or accept the proposal with increased premium, but reduce the cover to some extent… – Tushar Mehar

Pricing of a term plan assumes a perfectly healthy, non-smoker. The premium quotes generated on various websites is basis this assumption. However, a discrepancy in health (diabetes in your case) results in an increase in premium rates. This, in insurance parlance, is termed as a ‘rate up’. The precise rate up premium may vary amongst insurers. Recommend you explore possibilities with other insurers before finalising.

I have a money back policy of 15 years purchased three years back. The monthly premium is Rs 16,000. I wan to stop it now as I feel it is too expensive. What is the best way? Can I just stop the premium and let the policy continue till maturity? Or can I take whatever money is there in the policy now? – Raghu Shenoy

As the term suggests, a “money-back” policy is meant to repay your money at regular intervals over the 15-year period. From what you have shared, it appears that you have consistently paid monthly premiums over the last three years. Discontinuing payments or surrendering the money-back plan in such an instance will prove to be expensive and is not recommended. 

I have a term plan and a personal accident cover also. The sum assured is Rs 50 lakh for each. I also have two endowment policies of Rs 20 lakh cover each. I have been paying premium for the last 10 years. The two endowment policies are of 15 years each, so five more years to pay. The term plan is till age 60. Do I need more insurance? I am 45 years old and have two children and my wife is also earning. – Siddharth Raheja

You have not mentioned your annual income. As a rule of thumb, at 45 years of age, your life insurance cover should be between 10 -15 times your annual salary and extend till the end of your working life i.e. till you intend to retire. This is excluding the personal accidental cover. Since your spouse is earning, she too should consider taking an insurance cover on her life, as well. 

Rushabh Gandhi, Deputy CEO, IndiaFirst Life Insurance

Clear your doubts with regard to life insurance. Send your queries to [email protected]

Source: http://www.dnaindia.com/personal-finance/report-life-insurance-discrepancy-in-health-leads-to-increase-in-term-plan-premiums-2644047

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