Don’t hide any fact from insurer while filling proposal form

Published in Mint on Jan 14 2014, written by Kapil Mehta

How long does it usually take for the insurer to pay claims that happen due to critical illness?

—P. Chandra
The insurance regulator requires insurers to settle claims within 30 days of receiving the required documents and clarifications. Payment time for critical illness is similar to that for death claims. In FY12, which is the most recent data available, 83% of claims were settled within 30 days and an additional 10% within 30-90 days.
 The life insurance proposal form has a question whether I have had any medical tests in the past 5 years. The company salesperson is asking me to mark this as “no” since all my tests have been routine in nature. Should I do that?
—Suhas Abel
I strongly recommend that you mark the question as “yes” if you have had any medical tests at all. This shifts the onus of determining your health condition back to the insurer and leaves no basis for denying a claim. The salesperson has a vested interest in marking the question “no” because policy issuance will be faster and possibility of a decline less. Don’t succumb to that pressure.
 I am 35 years old, my wife is 31 years old and have a two-year-old daughter. I earn around Rs.2 lakh a month. I have a term cover of Rs.1 crore and traditional policies with combined sum insured of Rs.45 lakh. Am I adequately covered or should I buy more cover? Please suggest.
—Vivek
You are inadequately covered because your total sum assured should be 10 times your annual income, i.e., Rs.2.4 crore. Since you already have Rs.1.45 crore of sum assured, you should bridge the gap of about a crore with a term insurance.
Term is the most cost-effective way to buy death cover. A Rs.1 crore cover will cost you about Rs.17,000 per annum for insurance that covers you until 65 years of age. This is probably the most meaningful New Year gift you can give your family.
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