Personal Finance

Insurance uncovered

Rajalakshmi Nirmal | Updated on August 18, 2019 Published on August 18, 2019

I am 26 years old and working. In 2016, I had taken a term insurance from ICICI Prulife’s iProtect Smart for ₹1.5 crore for a premium of ₹21,000 (the policy has an accident rider for another ₹1.5 crore). In 2018, with the idea of discontinuing the earlier one, I took another term insurance from Tata AIA – Sampoorna Raksha for ₹1 crore for a premium of ₹14,000. Now that I want to continue both polices, will the insurers honour the claim in case of a mishap? Tata AIA did not ask for previous policies in the application form.

Arvind SV

You can hold any number of life insurance policies. It is legal.

Unlike in heath insurance, in life policies, on death of the insured, claim can be made across all policies.

Some insurance companies require the prospective customer to disclose details of other insurance policies they hold, and some do not. If Tata AIA had not asked you about the existing policies and you had not reported it, you don’t have to fret over whether there will be a problem at the time of claim.

The Indian insurance industry has high claim settlement record now and disputes are not as many as they used to be in the past. If your claim is genuine, you can be almost sure that both the insurers will settle it.

However, given that you are young, you can consider reducing your risk cover.

Generally, the thumb rule in insurance is the sum assured should be 10 times the annual income.

As your income grows and you take on liabilities like home loan, you may consider increasing the SA under the policies you have. At your age, it is recommended that you invest a higher sum of the earnings rather than spending it on insurance.

Also, the premium that you have specified on iProtect Smart seems to be on the higher side. This is probably because of the accident rider that you have opted for.

For ₹1 crore SA on a plain-vanilla life insurance policy for someone of your age, the premium should be around ₹7,000-11,000.

So, think if you really need the accident rider. Individuals in risky professions can take an accident policy. Here again, note that standalone personal accident policies are more comprehensive than the ones that come as a rider.

Remember that in term life insurance policy, there is no benefit when the individual survives the term.

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Published on August 18, 2019
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