In case, you want the best of both worlds – protection as well as guaranteed return on your investments, a guaranteed return plan is ideal. It saves money and builds assured corpus for one’s future financial goals.
– Kamlesh Rao
Q. I am 35 years old and live with my parents, my wife and a year-old child. In this new year, I plan to secure myself and my loved ones with a life insurance policy. However, I am confused, as there are so many types of policies and I do not know which one should I purchase?
Before opting for the appropriate plan, you need to identify the risk that you desire to hedge. As an earning individual who has dependents, a term plan will serve as an income replacement tool for your loved ones, in case of any unforeseen eventuality. It is a vital financial instrument for every earning individual. In case, you want the best of both worlds – protection as well as guaranteed return on your investments, a guaranteed return plan is ideal. It saves money and builds assured corpus for one’s future financial goals. If securing your child’s future milestones like education and marriage is on the top of your mind, you can go for a child insurance plan. And for those who wish to enjoy life cover benefits but also have a risk-bearing appetite, ULIPs are a good bet. So, assess your need and opt for a plan that will adequately cover your and your family’s future financial needs.
Q. I purchased a life insurance plan when I was 27 years old. I am 39 now and feel that the sum assured is inadequate and won’t be able to cater to my current as well as future financial requirements. Can I upgrade my policy with a suitable rider?
The sum assured amount of a life insurance plan gets fixed at the time of purchase and cannot be changed later. Since you feel that your cover is inadequate, you can either opt for a new life insurance plan or upgrade the existing one with the help of riders. Life Insurance riders offer additional benefits and coverage to a primary life insurance policy at a low premium. There are various kinds of riders available today offering a host of benefits. Some offer coverage against accidental death and/or disability while some offer risk coverage against critical illnesses. There are riders which wave off premium in case one is unable to pay them owing to a specific illness. There are many more that pay hospital cash, surgical cash, etc. The choice of a suitable rider will solely depend on your needs. Therefore, it would be important for you to first evaluate your existing cover, risks and financial requirements before opting for an appropriate rider which can add up to the existing policy and can offer added benefits.
Q. My life insurance policy is 11 years old. However, I have missed paying my premium for the last two years. Has my insurance policy lapsed? How can I ensure that I am covered?
It is very important for individuals to stay covered at all times and therefore it is important to pay all premiums by the due date. Lapsation due to non-payment of premiums depends on the type of policy and differs from policy to policy. Therefore, you should immediately check your policy document, wherein it will be mentioned that in case you fail to pay your premiums what will be the impact on the policy. So, it is prudent for you to contact your insurer via your insurance agent or the company’s toll-free number, and check if your insurer will still allow you to renew the policy within two years from the date of lapsation.
Q. I have a life insurance policy with a critical illness rider. In case I want to claim for a critical illness, how can I go about it?
In a life insurance policy with a critical illness rider, the policyholder can raise a claim payout request once he/she has been diagnosed with the critical illness. In case the policy has crossed the specified waiting period, you will need to submit the required claim documents and the insurance company will immediately pay the benefit of the rider to the claimant. Additionally, it is advisable for you to reach out to your insurance company and understand the procedure for a hassle-free claim settlement and more details pertaining to your policy.
Q. My 27-year-old son has been working for the past three years. Last year he was out of a job for almost eight months and it is then when he realized the importance of saving. My friend has advised him to purchase a life insurance policy along with other savings option. Will it be helpful and how?
Your son is young, and it is the right time for him to start planning for his future. Soon he will be growing in his career and will have additional responsibilities. Life insurance can work as a very useful financial solution which provides ample security and protection, and therefore should be a part of every financial plan. I would recommend young professionals like him to consider not just their current income and liabilities, but also their earning capability and key future financial milestones, before opting for a suitable life insurance plan. Such a plan will not only provide life cover but will also offer guaranteed returns on his savings. Besides, opting for the right policy, it will be important that your son covers himself with enough sum assured and hedge all his future financial risks adequately. Being young, he will be able to avail a higher sum assured at a much lower premium for the entire policy term.
The spokesperson is the MD and CEO, Aditya Birla Sun Life Insurance