Query Corner: Insurance

HOW TO CHOOSE THE RIGHT TERM PLAN

My 25-year-old son, who works with a software company wants to buy term insurance for `50 lakh. The term available generally is only for 30 years. When is the right time to take the policy? Can we take a five-year policy now and a 30-year policy later? How do we select the right insurer when there are multiple players offering different premiums? What does a rider mean? Are accidents covered by default or do we have to apply for it specifically? Is it advantageous to cover critical illness in the term policy itself? What are the pros and cons of an individual policy against a joint policy and will the policy remain intact if he becomes an NRI?

Barathidason R

You can consider LIC Amulya Jeevan -1, which is available with a 35-year term or any other term plan with the maximum available term. You can choose your insurer based on their services, experience in the market and premium of the policy that they offer. The basic sum assured provides cover against death due to any reason but riders in a life insurance policy provide additional benefits on payment of extra premium.

Double accident benefit is available as a default feature in some of the life insurance policies otherwise the same can be bought as a rider. Personal accident benefits and critical illness benefits can also be bought in the form of standalone policies. Joint Life policy provides death benefit to the surviving spouse in case either of the couple dies during policy term and the policy continues on the life of the surviving partner. All benefits of the insurance plan remain intact in case the life insured subsequently becomes NRI after taking the policy.

TERM PLAN FOR DISABILITY BENEFITS

I am 31 with a spouse and child to support. My monthly income is around `1,00,000. I have life insurance policies worth `15 lakh. I need a term plan to cover me up to `50,000,00, but I need this policy to cover every kind of disability also. Please tell me which insurer sells this kind of policy and what would be the approximate premium?

Pankaj Sharma

You can consider ICICI Prulife-Pure Protect or Kotak Life-Preferred Term Plan with disability benefit rider. You can also consider online term plans like ICICI Pru-iProtect. Though the disability benefit rider is not offered in this plan, you can consider buying a separate personal accident policy. Such a combination will be quite economical compared to your regular term insurance policy.

PREMIUM DIFFERENCE IN SIMILAR POLICIES

I am 41 and want to take a term insurance plan for a sum assured of Rs 1 crore. However, there is a wide difference in the premium rates offered by LIC for Jeevan Amulya and Aegon-Religare i-term plan. Is it safe to go in for Religare’s i-term? What is the reason behind the difference? Some people suggest I should opt for LIC since they have a good claim settlement record.

Pushpendra Singh

Insurance companies fix premium of their policies based on the factors like expense ratios and claim experience. Aegon Religare- iTerm plan is an online plan and can be bought directly on the company’s website without the intervention of an insurance agent. Because insurance companies save agent’s commission and other marketing expenses in promoting such products, therefore such benefits are passed on to the proposer.