Rajiv Jamkhedkar, CEO, Aegon Religare Life Insurance

—Chandana Mouli

Life insurance premium calculations are based on a number of factors that relate to the risk profile of an individual. Hence, it is possible that two individuals of the same age may get a different premium quotation. Other than age, life insurance companies look at sex, state of current health, occupation and income parameters, besides existing policies to determine individual premium. Some variance in any of these factors may lead to a difference in the premium. However, two people of the same age having identical traits and health indicators will receive the same premium quotation.

How does one ascertain the amount of life cover required?

—Abhishek Singh

There are many ways to calculate the amount of life cover required. Some of the key determinants are income, expenses and current liabilities, such as loans (home, motor and personal). A simple rule of thumb is to multiply your current gross annual income by 8-12 to arrive at the right amount of life cover. However, individual needs, expenses and liabilities are different and life cover needs to be customized accordingly.

On top of this, you must add a cover for outstanding loans or any personal liability, particularly a home loan, you have. This ensures that your current assets are safeguarded for your family.

What happens to the money already paid if the policy lapses? Can the money be claimed? Will I be paid interest for the time period I paid the money?

—A.K. Burman

You must remember that the life cover of any policy may cease as soon as the policy lapses. However, depending on the product bought and the number of years for which the premium is paid, the policy may acquire a surrender value or have balance of the unit fund value. This surrender value or the balance fund value amount can be claimed by surrendering the policy. It is, however, advisable to keep the policy running as the objective of insurance is long-term protection and savings.

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