I have accumulated R15 lakh in a unit-linked pension plan and would retire next month. I want to buy an annuity. Will the rate be fixed for my entire life?
Animesh Kumar
Yes, the rate will be fixed throughout the term. You could choose plans offering fixed term or lifetime payouts. Further, you could opt for either ?with refund? or ?without refund? of the purchase price. In the former, one gets monthly annuity during lifetime, and, on death, the family gets back the purchase price, viz., the amount invested in purchasing annuity. The latter offers no such refund, but gives out a higher monthly annuity payout. You could compare annuity products from different companies and purchase the one that gives the highest monthly annuity.
I am a 35-year software engineer and want to take a term plan online. Since I also smoke should I mention that, as I am told in that case I have to higher premium?
Dk Ramdas
Yes, you must be very honest and transparent with all disclosures. While there is a loading for smokers, which will impact the premium, it is important to realise that insurance is a contract based on the principle of ?Uberimae Fides? or ?utmost good faith? and underwriting decisions are based on the faith that the disclosures made by the customer are fully and completely true. If at any stage, it is found out that the disclosures were incomplete, depending on the severity, the policy itself could get cancelled. Further, in case of an eventuality, the claim itself could get rejected, defeating the very purpose of insurance. Secondly, most online plans beyond a certain ticket size do involve an offline medical test component, of which nicotine test forms a part, so the tobacco usage will show. However, in case you give up smoking at any point, you could go back to your insurer and apprise them of it, and they will rework the loading after a predetermined cooling period.
If I port my health insurance policy, will I be able to transfer all the bonus points that I have accumulated over the last five years to the new policy?
Partha Chatterjee
Under portability, you can transfer most credits, such as the waiting period of pre-existing conditions and bonuses accrued, and also get waiver of no-cover period. However, where the policyholder opts to club bonuses acquired under a previous policy with sum assured and treat this higher amount as revised sum assured, it will increase premium charges. Also, if the new insurer prescribes that one has to purchase in the multiples of R50,000, and your new sum assured with bonuses works out to, say, R1,25,000, the sum assured will be automatically increased to R1.5 lakh since the insurer cannot provide a cover for R1.25 lakh. But the portability benefit will only be available up to R1.25 lakh. You will have to pay additional premium for the R25,000 extra.
The author is executive vice-president, Kotak Mahindra Old Mutual Life Insurance
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