Investment products don’t require medical underwriting

Published in Mint on 29th July 2014, Written by Abhishek Bondia

How do I go about changing the nomination in my life insurance policy?
—Farah Mohammed

You have to visit the branch of the particular insurance company and fill a “change request form”. You need to submit an identity proof and original policy copy for verification.
In some cases, you may be asked for a relationship proof. After receiving these documents, the insurer will then endorse the new nominee and send an acknowledgement letter across.

Are there cases wherein I don’t have to undergo medical tests to buy a life insurance?
—Gaurav Tejpal

Insurers offer life insurance without medical underwriting primarily in investment products, i.e. endowment plans and unit-linked insurance plans. For term insurance, unless you are very young or buying a small amount of insurance, most insurers insist on a medical check up.
On investment products, insurers define a non-medical grid by age and sum assured. If you fall within the grid and have a clean medical history, then medical tests are exempted for you.
For example, if you are below 35 years of age, then no medical test will be required up to Rs.35 lakh of sum assured. The sum assured threshold decreases as age increases. You should actively seek a medical examination. Thorough medical underwriting reduces the possibility of repudiation.

What are the advantages of buying a life insurance policy at an early age? I am 26 years old and I earn around Rs.7 lakh a year. How much insurance will I get?
—Keshav

The need for life insurance is highest when you are young. At this stage in life, you have limited assets. Your dependants will lose a constant stream of annual income and have few assets if you die. Life insurance provides the much-needed money in such situations.
At a young age, an additional advantage is that insurance prices are low. Underwriting is simpler with fewer medical tests and questions.
As you grow older, the possibility of age related diseases is higher and increases insurance rates. The maximum insurance is fixed as a multiple of annual income.
The maximum limit is about 25 times the annual income, which means you can get up to Rs.1.75 crore of life insurance cover.

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