How do life insurers decide how much life cover to give? Does it entirely depend on how much premium I am ready to pay?
There are many criteria that determine the cover offered by a life insurer. The insurance cover depends on the income of the person, whether the person already has a life insurance cover, the risk assessment of the life to be insured, the customer’s current health status, age, ability to pay the premium and the amount of sum assured asked for. These factors together determine the amount of insurance to be granted.
I am 40 years old and am diabetic. I want to take life insurance, but am afraid I won’t get one or I may be charged a very high premium. Is it so? Please explain the process of getting a life cover for people who have a pre-existing disease.
In case the applicant is diabetic, the issuance of a life insurance cover depends on various parameters, such as the extent or level of diabetes diagnosed. In all probability, the cover is issued to the person, but the premium charged could be on the higher side. The amount of extra premium will depend on the level and type of diabetes. If a person has a pre-existing disease, the life insurer determines the extent of the same through medical tests. Depending on the intensity or extent of the disease, the life insurer will suggest a higher premium amount depending on the health risk assessment.
Can I take a life insurance policy in the name of my spouse, my three-year-old child and myself? Can the insurer deny me a cover?
Yes, you can take a life insurance policy for yourself, your spouse and your three-year-old-child. In fact, a child plan can be taken as soon as the child is born. Regarding the second part of your question, yes the company reserves the right to decline a life insurance proposal. Usually, this is done after assessing lifestyle, health and other criteria. Issuance or denial of a life insurance cover usually depends on the life insurance company’s internal policies.
What do you think is the right age to take a life cover and why?
One can take a life cover depending on one’s needs at any point in time. However, the earlier one takes a life cover, the cheaper will be the premium rate. Ideally, everyone should buy a term plan as soon as they land their first job. Buying a term plan at an early stage will get protection at the cheapest premium rates. Also, changes in life circumstances warrant periodic reviews of your risk cover to ensure that your insurance keeps pace with changing needs. Failure to “top up” may mean you’re under-insured. At certain stages in your life, such as marriage or childbirth, your responsibility towards the family increases. In such cases, you may want to increase your life cover. You should review your insurance cover every few years. Also assess the savings required.
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