Life Insurance: V Philip

By : Business Standard
Last Updated: Mon, Nov 05, 2012 05:05 hrs
​life insurance

I have to repay a personal and a home loan. I am concerned the repayment burden will fall on my family, if something happens to me. Can I insure these loans? If yes, how?
Looking at the changing lifestyle patterns, where more and more people are leveraging their current earning power by raising debt, some insurers have come out with loan protection plans where one can select from a wide range of interest rates. In these term plans, the loan outstanding on death is paid to the nominee.

This type of product can be an excellent tool to cover any type of loan. There are also plans which give you the flexibility of choosing interest rate and repayment tenure.

Under what circumstances is the premium waived in a life insurance policy? Also, on which policies do they offer this?
Certain life insurance policies offer the waiver of premium benefit. This feature waives future renewal premiums that help in creation of an uninterrupted corpus in the case of eventualities like total disability, critical illnesses or unfortunate death of the breadwinner of the family by which further renewal premiums cannot be paid.

The insurance company waives all further renewal premiums payable and the policy continues. The benefit is usually available as an in-built feature or a rider with regular premium endowment and term plans.

I am 37, with no health problems. I am confused between a life insurance policy with a critical illness rider and a comprehensive health plan. Which one should I opt for?
Before zeroing on any life or health insurance plan, it is critical you understand the benefits of each.

While a health insurance plan will cover your medical expenses in case of hospitalisation, a critical illness plan or rider will provide a lump sum amount on diagnosis of any of the listed critical illnesses. For example, a critical illness cover of Rs 10 lakh will pay the amount upfront in the event of diagnosis of cancer or any of the other critical illnesses listed in the policy.

The money will be helpful to meet the policyholder's expenses during or after the treatment, that is, compensate for loss of income. On the other hand, a health insurance policy will take care of all admissible expenses incurred only during hospitalisation and certain days or expenses pre- and post-hospitalisation.

The purpose of life insurance is to secure the financial future of your family, in case of your untimely death. A critical illness rider is to meet the interim expenses if diagnosed with the critical illnesses.

Due to the limited information given, you must have a term plan of a sum assured worth 8-10 times your annual income, along with an individual health plan.

If you have any dependents, then consider the number and their age while taking the health plan and increase the sum insured by 10-15 per cent every year. Evaluate your requirement before taking a critical illness plan.

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