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Ask Mint Money | Non-disclosure of health records can lead to rejection of claim

Ask Mint Money | Non-disclosure of health records can lead to rejection of claim
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First Published: Tue, Nov 15 2011. 11 24 PM IST

Updated: Tue, Nov 15 2011. 11 24 PM IST
I am 26 years old and want to take a life insurance policy. How do I decide which riders to buy?
—Mrinal Kumar
At your age, I would recommend an accidental benefit rider along with the life insurance plan you buy. In addition, there are impairment (disability) and critical illness benefit riders that help in adjusting to a new lifestyle caused by an illness or physical impairment. You can learn more about them from a certified financial planner and make an informed decision.
I want to buy a life insurance plan for my father who is 62 years old. What is the maximum entry age for a life policy?
—Kushal Gaurav
The maximum age at entry in a life policy varies from one product to another. Most insurance companies allow entry till 65 years. I would suggest you speak to a financial planner on the need for insurance at this age. It is worth considering if your father’s financial goals may be better served through other financial products.
I am 28 years old and was sold a unit-linked insurance plan (Ulip) for which I had paid premiums for three years. This is the fifth year and the value of the fund is not as desired. Should I redeem it next year and take a pure life insurance cover?
—Shikha Dua
It is not advisable to replace your savings plan with pure risk protection plan as the objective and benefits offered by these are different. Your savings plan offers you a platform for wealth accumulation, while a pure risk plan replaces your income to the extent of the risk cover in the unfortunate event of your demise. Insurance contracts are long term in nature. In Ulips, the returns are market-linked and can be volatile. My suggestion is to take a long-term view and hold on to your investments. Your fund value is likely to recover as market sentiment improves. You can make use of fund switches to manage the funds as chosen in your policy.
However, none of the above should preclude you from buying a term insurance plan if you aren’t adequately covered. At your age, your cover should be 10 times your annual income. If you aren’t, go ahead and buy that term plan.
I bought a life insurance policy but forgot to disclose that I have high blood pressure and have been a diabetic. Will this affect the claims process?
—Ramesh Jha
Non-disclosure of key health information is being penny wise and pound foolish. You may save a bit on premium but you seriously increase the risk of claim repudiation (rejection) in case of death under section 45 of the Insurance Act, 1938, where the insurer can prove that the information was material and the policyholder deliberately suppressed the facts. My suggestion is to go back with full disclosure and get a new policy. The additional premium you will need to pay is worth it.
Amitabh Chaudhry MD & CEO, HDFC Standard Life Insurance Co. Ltd
Queries and views at mintmoney@livemint.com
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First Published: Tue, Nov 15 2011. 11 24 PM IST