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Ask Mint | Life insurers can ask for medical tests

Ask Mint | Life insurers can ask for medical tests
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First Published: Tue, Apr 06 2010. 09 12 PM IST

Updated: Tue, Apr 06 2010. 09 12 PM IST
I took a life cover of Rs30 lakh five years ago. I need some money for a family emergency. Will borrowing from my life insurance hamper my sum assured in any way? Will it be very expensive? Should I look at other options instead?
—Venu Rao
Borrowing money from a life insurance policy does not reduce the sum assured and, in most cases, it is less expensive than personal loans. However, the availability of loan depends on the type of policy that you have purchased and the terms and conditions mentioned in the policy document. For example, unit-linked insurance plans allow partial withdrawal, while endowment plans allow loans against the policy.
Does a life insurer ask for a medical test? What are the reasons for that? On what basis do they ascertain the premium under such conditions?
—S. Balakrishnan
A medical test is required depending on the age of policyholder, sum assured requested, the type of insurance policy chosen, one’s occupation, etc. If any of these seem to entail higher risks, the insurer can call for medical tests to ascertain the risk level before issuing the policy. The risk is collated under each of the above heads to arrive at the total risk, which is then converted into a “premium extra”.
Is there any provision or any such life insurance plan under which the nominee gets the sum assured in instalments over a period of time?
—Sridevi Sarika
A few plans available in the market, such as income protection plans, pay the benefit to the nominee in instalments. Apart from these, this type of benefit is normally found in a few child insurance plans. Under these, on the death of the policyholder, the child (nominee) gets the sum assured in instalments on select ages or period.
What happens if I nominate someone for my life insurance but lose contact with the person? Will the insurance firm track the beneficiary? Where does the money go if the insurer fails to contact the actual nominee?
—Sagar J.
A nominee is usually from the immediate family. For example, spouse, child, parents, brother or sister. If a nominee fails to contact the insurance company when a policyholder dies, the insurance company makes every attempt to contact the nominee to pay the benefit amount. It is advisable to keep the insurance company updated about the contact details of the nominee(s), if the nominee’s address is different from that of the policyholder.
—Queries and views at feedback@livemint.com
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First Published: Tue, Apr 06 2010. 09 12 PM IST