I have heard that those who drink and/or smoke have to pay a higher premium. I drink once or twice a week (around 180 ml a week) and smoke occasionally. What could be the impact on the premium of my term plan?
A particular lifestyle (regular exercise, drinking, smoking, stressful life) may affect the health of a person and, therefore, increase or decrease the risk of death. The impact may depend on the extent to which that lifestyle is followed, the person’s age and the period for which he/she has been living this life (smoking or exercising, for example).
Some insurers provide differential premium rates in case of term plans for smoker and non-smokers, based on their medical tests. Premiums for non-smokers are lower compared to smokers.
I bought a life insurance policy three years ago. I am going abroad for five years. Will the policy pay my dependents in the event of my death abroad?
Yes, the benefits stated in the policy will be payable to your nominee/legal heir(s) as long as the policy remains in force through regular payment of premiums. This is so because life policies sold in India are generally free from the place of residing, that is, the risk is assessed based on the place of residing at the time of buying the policy.
I am 38 years of age. I want to buy an insurance plan for my five-year old son? Should I buy it in his name or in mine?
Many parents, when they desire to take a policy in the name of their child, want the policy Moines, as and when available, to be used for the benefit of the child. If that is so, it can be achieved by making the child a beneficiary in the parent’s policy.
A life insurance policy can also be taken on the life of the child. If such a policy is taken, care needs to be taken the earning parent’s life is covered and premium waiver benefit for the child is also sought with the plan. Otherwise, such a policy will leave a liability for the family upon the death/disability of the earning parent as the family will be required to pay the premium.
I am 42 years of age. I think term plans are a waste of money if one survives the policy period and hence, have never bought one.. Are Lips good alternatives as they pay back the invested money?
Many of us believe that purchasing a term plan is a waste of money. But, risk premium is charged in savings plans, too. Selection of an insurance policy should be based on the purpose of buying it. If the purpose is only to cover the risk of death, term plans offer coverage at the lowest rate. If the purpose is to save money for a specific purpose or for periodic withdrawals along with the death cover, Ulips would help build the corpus with the liquidity and choice of various funds and low, transparent charges.
The writer is MD and CEO of Future General Life Insurance. You can send your queries to yourmoney@bsmail.in
