What habits or diseases can increase life insurance premium? Also, if someone quits smoking, will that affect the premium?
Any disease or habit that affects a person’s survival (possibility of dying earlier) will affect the life insurance premium. If a person quits smoking before taking a policy, the effect on the premium would depend on the period since the person has quit smoking as well as the underwriting guidelines followed by the life insurer. If the person quits smoking after buying a life insurance policy, the premium will remain the same even if the person paid a higher premium earlier.
Can a person’s life cover amount go to creditors, say, a home loan or personal loan, on his death? What needs to be done for the same?
Yes, a person’s life cover or sum assured can go to creditors, such as home loan or personal loan, on the death of the insured person. In such a case, the life insured must assign the benefit proceeds under the life insurance policy being bought to the particular creditor.
One must remember though that this assignment overrules benefits to nominees mentioned. This means that if the person has provided nominees to receive death benefits, and also assigned the benefits to a creditor, the life insurer will pay the full amount to the creditor.
Do companies pay different amounts on death under different circumstances, say, normal death and accident?
Different products from various life insurance companies provide different benefits on death due to accident and non-accidental death. Typically, most life insurers provide increased death benefit on accidental death through riders, such as ADDD (accidental death, disability and dismemberment). A person needs to check the details of the policy to know whether there is a difference in payment under the two situations. If it’s not already built into the policy, it is advisable to take an accidental death rider along with your life insurance policy to get increased benefit in case of death or disability through accident.
Are there comprehensive life-cum-health covers? Is it better to take them separately?
There are comprehensive life-cum-health covers available. Taking both covers separately or taking a comprehensive policy should depend on your need. Some products give life cover along with medical benefits through “critical illness” or “hospitalization benefit” riders. This is a cheaper option. However, you should opt for a separate comprehensive health policy if your primary need is medical cover. Even a comprehensive life-cum-health policy would be cheaper than taking two separate covers.
Rajiv Jamkhedkar is the CEO of Aegon Religare Life Insurance
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