Need Any advise on insurance !! Get insurance from your insurance
You can also Write to Us:
TERM LIFE FAQS
Very often we come across few questions that
are left unanswered most of the times when we think of Term Insurance. How does
claim settlement work in case you have more than one term insurance policy? Does
term insurance provide cover outside India? What if I suffer from some major illness
or start smoking after buying a term insurance policy?
- Do Term Insurance pay in case of Accidental Death ?
Yes, term insurance pays in case of an accidental death. The sum assured or cover
taken under the term plan will pay the claim if the death has occurred due to any
reason, be it natural or accidental death, or death due to some illness.
There are certain riders (additional benefits) such as accidental death benefit,
permanent disability rider and critical illness rider.
By buying/adding these riders to the policy, a policyholder can ensure that his
nominee will get an amount over and above the basic sum assured (due to any of the
- Does Life Insurance covers death outside India ?
Yes, term plans cover death outside India provided the policyholder has updated
this fact with the insurance company.
He needs to mention that he now lives outside India. Just like change of phone number,
address or nominee, there is a facility in the policy service form where the policyholder
has to mention that he is going abroad.
However, if he is going to a country that is marked as unsafe like Pakistan, Burma,
Somalia etc, then the company will decline this facility. Otherwise, this cover
will be valid in other countries like US or UK. (Company specific)
- To what extent Pvt Insurance companies investigates death compared to LIC
There is a difference between early claim and normal claim. If a claim arises within
the first two years of buying the policy (This period varies from company to company),
the company investigates extensively before settling the claim.
You can very well understand if someone has a cover of Rs 50 lakh by paying Rs 7,000
annually (And he has taken this policy on monthly basis, i.e. paying around Rs 600
monthly), then the company is at a great risk.
Hence, the company will doubly check everything to settle the claim. In normal claim,
premiums are paid regularly and the policy is in force for a long period, say 12
to 15 years.
In these cases, there are not much issues in getting a claim, be it LIC or any private
- If I buy a term insurance policy today, can its premium change in the future?
Unless and otherwise it's mentioned in the policy document. Premium of a term insurance
remains the same throughout the term of the policy provided everything remains the
same with the policyholder.
That is, the policyholder has not developed any illness or any smoking/drinking
habit. On declaring any such thing, company might apply loading and thus the premium
- What if a person becomes a smoker after some years of taking the policies
If the policyholder has developed any habit, like drinking or smoking, after buying
the policy, he has to disclose this fact to the company as now he belongs to a different
The company may levy loading(increase in premiums) on the existing premium or even
cancel the policy. This is necessary as violation of this term can result in decline
of the claim in extreme cases.
- What if a person was a smoker long back but not at the time of taking the
Depends on the policy, but just for example, the Kotak Life Insurance proposal form
mentions that the client has to declare whether he was a smoker or drinker earlier
also even if he has left that habit long ago.
However, I am not sure about other companies. Also, it depends on the company whom
they consider as a non-smoker at the time of issuing a policy.
Max New York Life Insurance, for its Platinum Protect (term insurance), considers
people, who have left smoking more than three years ago, as non-smokers. So please
check the company's rule.
- What kind of deaths are not covered in term insurance?
Some important facts, which most of the people are unaware of, are that most companies
exclude "Death due to Terrorist Attack".
Although such claims are settled on humanitarian grounds later on when the nominee
approaches Insurance Regulatory and Development Authority (IRDA) but such exclusion
is there in most companies.
Other important fact, which public at large is unaware of, is that insurance companies
do not cover death due to war or natural disaster like earthquake/tsunami.
Because in these cases, death toll is high and the claim to be settled runs in crores
of rupees which is difficult to settle by the company all of a sudden.
Therefore, these facts should also be kept in mind while buying a term insurance.
- How to take care of claim settlement in case of more than two policies?
The very first thing, in these cases, is to declare in the proposal form that you
already have a policy from an XYZ company. (There is a column in every company's
proposal form, which a client has to fill if he has an insurance policy from the
same company or any other company).
Once such information is provided, then at the time of claim, the usual practice
is to submit the Death Certificate to the insurance company with whom the policy
is running for the longest period.
Other companies are then informed of the procedure due and an acknowledgment from
the FIRST company is provided to them which is accepted by other companies.
Moreover, of late, it has been reported that generally insurance companies do not
ask for an original death certificate to settle the claims, even a photocopy of
the certificate will do.
So be alert while filling the form and provide all the information about your previous
policies to prevent even a minor problem later on.
- Can NRI's buy Term Insurance ?
They can, but there is a catch. As a general rule, A person has to be resident in
india to take up insurance policy from an Indian Company, reason being the documents
required by the company like Address proof/age proof are to be for some place in
Moreover, if the Sum assured required is more than 50 lakhs or so, customer is required
to submit his financial papers such as last 3 years ITR or Form-16 which again should
be done in India only.
Last thing, medical tests would be done at some medical center affiliated to the
insurance company near the address of the client which again should be in India.
So these are reason why insurance might have been declined to some NRI.
So one way which might work is this , If a NRI wants to take Insurance, then on
his/her next visit to India he should submit his proof of residence, age, last 3
years ITR etc and get his medical done at his Indian address.
This way he can get his policy issued very easily.
However, there is no need to complicate it and incase you are out in some country
and plan to be there for next couple of years , the best thing would be to take
you can buy term insurance that time.
- What should I look for before I decide to buy a policy?
You must check and see whether or not there is availability of guarantee of return,
what the lock in period is, details of premium to be paid, what would be implications
of premium default, what the revival conditions are what the policy terms are, what
are the charges that would be deducted, would loan be available etc.
- What is the importance of a proposal and the disclosures made therein?
The disclosures made in a proposal are the basis for underwriting a policy and therefore
any wrong statements or disclosures can lead to denial of a claim.
- What are special medical reports required to be submitted in Term insurance?
In case of certain proposals, depending upon the age of entry, age at maturity,
sum assured, family history and personal history, special medical reports may be
necessary for consideration of a risk.
if the proposer is overweight, special reports like Electro Cardiogram, Glucose
Tolerance test etc could be required, while for underweight proposers, X-ray of
the chest and lungs with reports could be required.
- What is meant by Paid-up Value in Conventional Life Insurance Policy?
After premiums are paid for a certain defined period or beyond and if subsequent
premiums are not paid, the sum assured is reduced to a proportionate sum, which
bears the same ratio to the full sum assured as the number of premiums actually
paid bears to the total number originally stipulated in the policy.
if sum assured is 1 lakh and the total number of premiums is payable is 20 (20 years
policy, mode of premium is assumed yearly) and default occurs after 10 yearly premiums
are paid, the policy acquires the paid up value of 50,000/-.
Paid up Value = No. of Premiums Paid / No. of Premiums Payable X S.A=10/20 X 100000
This means that the policy is effective as before except that from the date the
11th premium was due, the sum assured is 50,000/- instead of original 1,00,000/-.
To this sum assured the bonus already vested (accrued) before the policy lapsed,
is also added.
Example if the bonus accrued up to the date of lapse is 35,000/-, the total paid
up value is 50000 + 35000 = 85000.
- How is Surrender Value calculated in Conventional Life Insurance Policy?
Surrender Value is allowed as a percentage of this paid up value. Surrender value
is calculated as per the surrender value factor, which depends on the premiums paid
and elapsed duration.
- How is the Loan on Policy calculated under Conventional Life Insurance Policies?
If the policy conditions permit grant of loan, loan is sanctioned as a percentage
of the Surrender Value.
- What are the requirements to be submitted in case of a Maturity Claim?
Usually the Insurance Company will send intimation attaching the discharge voucher
to the policy holder at least 2 to 3 months in advance of the date of maturity of
the policy intimating the claim amount payable.
The policy bond and the discharge voucher duly signed and witnessed are to be returned
to the insurance company immediately so that the insurance company will be able
to make payment.
If the policy is assigned in favour of any other person the claim amount will be
paid only to the assignee who will give the discharge.
- What is meant by settlement options?
Settlement option means the facility made available to the policy holder to receive
the maturity proceeds in a defined manner (the terms and conditions are specified
in advance at the inception of the contract).
- What documents are generally required to be submitted in case of death of
life assured while the policy is in force?
The basic documents that are generally required are death certificate, claim form
and policy bond, Other documents such as medical attendant's certificate, hospital
certificate, employer's certificate, police inquest report, post mortem report etc
could be called for, as applicable.
The claim requirements are usually disclosed in the policy bond.
Want to know More?
Call +91 8447425559 or click here
to contact us