Life insurance: Buy term plan based on your protection needs, not chances of claim rejection

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New Delhi | Published: August 28, 2018 1:37:27 AM

If the customer has declared everything truthfully and the insurer has issued the policy, then the chances of rejection is mostly nil.

Rejection of a claim depends on the cited exclusions in a policy. For most term insurance plans, such conditions and exclusions are mostly the same.

Is it advisable to buy two term plans just in case one company rejects the claim?
–Sahil Kumar

Rejection of a claim depends on the cited exclusions in a policy. For most term insurance plans, such conditions and exclusions are mostly the same. Hence, if a term plan is rejected by one company on some specific grounds, chances of the same being rejected by another is also high. A claim is usually rejected if any material fact like health condition, occupation, etc., is not declared by the customer at the time of policy purchase. If the customer has declared everything truthfully and the insurer has issued the policy, then the chances of rejection is mostly nil. So, purchase a term plan post evaluating your protection needs and not merely the chance of rejection. Also, by splitting your sum assured into two policies you will lose out on the discount that insurers offer for high sum assured. You may also end up paying more for two policies that just buying one.

I have taken a unit-linked insurance plan in 2015, The returns till now are not at all impressive and I would have earned much more by investing in mutual funds. Should I withdraw now?
—Subhankar Ghosh

As per the revised Ulip Guidelines, the lock-in period for a Ulip is five years. So, you would not be able to surrender the policy until the year 2020. It is important to note that ULIP is meant for long-term investment and the actual benefits of such a policy come in when customers stay invested for longer term. Short-term fluctuations may affect returns, but in the long term, customers do stand to benefit.

I took a life insurance policy 12 years ago. After eight years, I took a loan against policy and paid the loan premiums regularly. But now the plan has been closed. What should I do?
—S Krishnan

You do not have to worry and can continue with the plan. When a product is closed, the insurance company only closes the same for new customers. The insurer is obligated to continue servicing its existing customers as per the terms and conditions of the product. Hence, even if your product has been stopped by the company, you will be able to continue to pay your premiums and will also receive the designated maturity amount as per the guidelines of the policy. You can further write to your insurance company seeking clarity on it.

Pankaj Razdan is MD & CEO, Aditya Birla Sun Life Insurance and Dy. CEO, Aditya Birla Capital. Send your queries to fepersonalfinance@expressindia.com

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