Money-back plan: an effective planning tool

Money-back plan: an effective planning tool
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First Published: Mon, Mar 23 2009. 12 19 AM IST

Updated: Mon, Mar 23 2009. 12 19 AM IST
The insurance business in India isn’t just growing, but also becoming more sophisticated in terms of product offerings. To help readers keep ahead of developments in this business, Mint features a Q&A on insurance every Monday.
I am a 30-year-old man and I want to invest in a life insurance plan. Is there any plan where I can receive regular money during the tenure of the policy?
You can invest in a money-back plan. A guaranteed money-back plan can help you plan effectively for critical milestones.
The plan not only covers your life, it also assures you a certain percentage of the sum assured as cash inflow at regular intervals.
The full risk cover continues for the entire policy term over and above the instalments already paid. At the end of the term, the balance sum assured, along with bonuses or guaranteed additions, is paid to you.
I had a stomach ulcer problem a few months back and my life insurance agent asked me not to mention it in the proposal form. But my friend, who works for a life insurance company, said I should disclose it. Whose advice should I accept?
Life insurance is like any other legal contract. In addition to that, it is based on a special principle—the principle of utmost good faith. The insurer decides to give you insurance cover based on the declarations made by you in the proposal form. In case there is any misrepresentation or suppression of any material fact in the proposal form, the insurer could reject your claim.
By contrast, if you disclose the medical condition truthfully, the insurance company might charge a higher premium to compensate for the higher risk. But you would then ensure the security that you sought to provide for your family. In rare cases, the insurer could postpone or decline your application for insurance.
Readers are welcome to write in with their queries to askmint@livemint.com. The questions will be answered by senior executives from leading insurance firms. This week’s expert is Rajesh Relan, managing director, MetLife.
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First Published: Mon, Mar 23 2009. 12 19 AM IST