Insurers charge a higher premium if condition of bronchitis is severe

Published in Mint on, Mar 19 2013, Written by Kapil Mehta

I bought a term plan of Rs.50 lakh three years ago. Now my income has increased threefold. Do I need to increase my cover? If yes, then tell me ways to do it.
—K. Baig

You ought to have about ten times your annual income as term cover. Since your income has increased threefold I would expect your insurance need to increase proportionately to Rs.1.5 crore or more. You will need to buy a new plan to increase your cover. Given that term rates have fallen considerably over the past few years, you may find it cheaper to purchase an altogether new plan for Rs.1.5 crore rather than just buying the incremental Rs.1 crore insurance you need.
Make sure you purchase the new plan before the renewal date of your old plan. The last thing you want is for your old policy to lapse without the new enhanced cover being in place.

My mother bought a unit-linked insurance plan (Ulip) seven years back and now she does not want to continue it. Can I get it transferred in my name?
—Aruna

There is a conceptual as well as a practical answer to your question. Conceptually your mother can assign the policy to you through an endorsement in the policy contract or by signing an independent assignment deed. The endorsement is more cost effective as a separate stamp duty does not need to be paid. An absolute assignment will transfer all rights and benefits to you in an irrevocable manner.
Practically, the Ulip that your mother purchased seven years ago is part of a family of products that were subsequently discontinued by the regulator. You may find it economically beneficial to completely surrender the policy and then invest the funds in newer generation products.

For an ailment like bronchitis, will the premiums charged for a life insurance be higher?
—Teena

The premium loading, if any, depends upon the severity of bronchitis, whether it is chronic or temporary, and the underwriter’s assessment of how well you will manage your condition. Generally, I find insurers do not charge a higher premium for bronchitis. Unless the condition is chronic and severe, they tend to take the view that this health condition can be managed well through medication and good care.

I am expecting a baby next month. Is this the right time to buy a life insurance policy?
—Tavleen

This is the right time for you to think about insurance since your dependants are about to increase. Buy a term insurance that is about 10 times your annual income.
However, insurers do not normally issue insurance in the last trimester of pregnancy. You will have to wait until after the baby is born to buy insurance.

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