Importance of disclosing health information

Last week I read a blog post (in Malayalam) shared in Facebook by one my friends. A heart wrenching story of a father who lost his son. The young man, in his late twenties, passed away in his sleep. If fate was in its cruel mood, the insurance company's denial to pay the insurance amount was probably even worse.

The young man had taken two policies. One was from LIC (sum assured of 1 lakh and annual premium of Rs. 5,000 or so) and another from a new generation private insurance company (ULIP: sum assured is not mentioned and monthly premium was Rs. 5,000). Like thousands of other Indians, both the covers were taken through insurance agents - who were either close friends or relatives. The young man had a previous history of epilepsy and was under treatment from a leading hospital. He was healthy otherwise. Married and working for a private IT firm. The agent in the case of private insurer, even though alerted by the young man, advised them not to disclose the information. In fact the application form was filled up by the agent himself and he assured them with typical "dont worry", "I will be there" and "no problem". At the time of claim, LIC processed the claim without much problem and the private player promptly denied (they found out the treatment history from hospital). And as one could guess, the agent who sold the private insurance policy had vanished (changed jobs and wouldn't take the phone)!

Term plans for topping up sum assured

With the arrival of a new dependent, i recently reviewed my insurance portfolio and realized that i needed to enhance my life cover. I knew that a lot of new products (especially that available online) has been introduced in last one year. I tried getting an online quote from 3 private insurance providers - ICICI Prudential, AEGON Religare and MetLife.

Are ULIPs getting better?

I was recently approached by an insurance agent with a ULIP. Even though I was not willing to take the policy, he wanted to present the plan and get my feedback. 

The plan in question is Birla Sun Life’s Classic Endowment Plan . The basic sum assured for the plan presented to me was Rs.3,75,000. But paying an extra premium I can get the life cover enhanced to whatever I prefer. In this case, we took the enhanced sum assured as Rs. 18,00,000.  Policy paying term is 10 years (I pay for only 10 years) and the policy term is for 30 years (I get cover for 30 years). For a 33 year old male, the annual policy worked out to Rs.36,538. (total pay-out of Rs.3,65,380)

Common Insurance Mistakes

Here is a short story based on a real life example.

Mr.X passed away two months back after a sudden illness. He was 52 and is survived by his wife, college going daughter and school going son.

Mr.X worked in the Merchant Navy and was always aware of the risky nature of his job. So he was more than happy to take a few insurance policies when approached by relatives/ friends who were insurance agents. He kept all the policy documents with his wife for safe keeping. Being a house wife, he knew she was good at filing papers neatly, and she was the one who would need those anyway, if something happened to him. He had 5 policies in all and his yearly premiums were close to 75,000 - more than sufficient to cover the tax exemption limits along with his PF contributions. His annual salary was around 10 lakhs.