Ask Mint Money | Under critical illness rider, claims entertained after six months

Ask Mint Money | Under critical illness rider, claims entertained after six months

When would I get the payment if I have a critical illness rider with a life insurance policy?

—Hemant

Critical illness rider provides a lump sum payment (as decided by you), irrespective of the cost of medical treatment. The benefit is provided on diagnosis of any of the critical illnesses covered by the insurer. I would advise you to read the product brochure to understand the exclusions. For example, insurers exclude claims under this rider within six months of the issue of policy. This is to discourage customers from applying for this benefit after suspicion/diagnosis of any of these diseases.

What happens in case a life insurance policy is terminated before maturity?

—Manas Sen

If you terminate a term plan by not paying a premium, your risk cover will cease.

In traditional plans, if you stop paying premiums (after the grace period), your policy will either lapse or move to a paid-up status. In a lapsed state, the risk cover would cease and no benefits would be payable. In a paid-up state, the sum assured would reduce and the policy will cease to participate in future profits; in other words, new bonuses will not be added.

In unit-linked insurance plans, on discontinuance of your policy before the completion of the fifth policy year, your fund value less any applicable discontinuance charge will be moved to the “discontinued policy fund" and will earn minimum guaranteed returns as specified by the regulator. The fund value is payable to the policyholder after the completion of the fifth policy year. The risk cover will cease in the “discontinued policy fund" state.

You will also not be able to avail tax benefits (if any) on discontinuance of your life insurance policy. However, you have the option to revive your policy as mentioned in your policy document except for a pure term plan where you would need to apply afresh.

I have a life cover of 50 lakh. Now I am going to the US for good along with my wife. However, my mother is still in India living with my brother. The beneficiaries are my mother and my wife. Can I continue the cover? Do I need to inform the insurer?

—Ratan

Your movement to the US will not impact the coverage offered under the policy. You must continue to pay renewal premium using the online facility. Also, keep your contact details updated in the insurer’s records.

Amitabh Chaudhry MD & CEO, HDFC Standard Life Insurance Co. Ltd

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