Published in Mint on August 20th, 2013, Written by Kapil Mehta
What’s premium waiver benefit?
—Shakti Menon
Premium waiver benefit is an excellent feature offered in many child insurance plans. If the insured parent dies, then the requirement to pay premiums for the remaining policy term is waived off. Instead the insurer pays the premium and this helps build the corpus that the parent had planned for. From a child’s perspective, premium waiver ensures that he receives the maturity payment that was intended for him even if the parent dies.
I am 42 years old and I do not have any health problems. Should I buy a life insurance plan with a critical illness rider?
—Rajat Singh
The perfect time to buy a term insurance policy with a critical illness rider is when you are healthy and young. You should purchase a term cover that is about 10 times your annual income and a critical illness cover that gives a cover of at least one year’s annual income. At your age, Rs.1 crore of term cover until age 65 will cost less than Rs.30,000 and a critical illness cover of Rs.10 lakh will cost about Rs.12,000. Buy a regular health insurance policy as well.
What will happen if the assignee of a life insurance policy dies?
—Shankar
When you assign your insurance policy to someone, all the rights, titles and interest get transferred to the assignee. If the assignee were to die, then policy rights would devolve to the assignee’s legal heirs. The person who assigns the policy (assignor) cannot make any changes after the assignment is executed.
I am buying a term plan with my children as nominees. The insurer has asked that I name an appointee as well. Why is that?
—A. Shrivastava
If the nominees are minors, then you need to name an appointee as well. The appointee, who must be an adult, will be paid the sum assured if you die while your nominees are still minors. You will need to instruct the appointee directly or through a will to take care of the money for your intended nominees. If you die when your nominees are adults, they will be paid the sum assured directly.
I suffered a heart attack a few months ago I have two life insurance policies that I had purchased a few years ago. Do I need to inform the insurers about my health condition?
—Manshra
You do not need to inform the insurer since the policies have already been issued to you.
However, ensure that you renew the policies well in advance of the renewal date. The insurers can ask for a medical declaration if you pay your premium after the renewal date and the payment delay gives them an opportunity to terminate the policy prematurely.
You may also want to consider buying health insurance. A few insurers offer policies tailored to people with pre-existing or heart conditions.
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