Ask Mint | Cover comes into effect after the first premium is paid

Ask Mint | Cover comes into effect after the first premium is paid

The insurance business in India isn’t just growing, but also becoming more sophisticated in terms of product offerings. To help readers keep ahead of developments in this business, Mint features a Q&A on insurance every Monday.

I am 23 years old, and have just started working. I am looking at buying my first insurance plan. What I want to know is, after a policy is bought, how long does it take for the insurance cover to come into effect?

The actual cover in a life insurance policy comes into effect once the proposal form is accepted by both the customer and the insurance company, and the first premium has been paid by the customer. Most companies provide a temporary conditional cover during the application process. However, certain conditions have to be met for this, and these vary from company to company.

I am 37 and earn Rs15,000 per month from a job that does not give pension. I have five life insurance policies worth Rs5 lakh, with an annual premium of Rs30,000. Do I need any more policies?

The requirement of insurance varies from individual to individual. It is advisable to undergo a financial health check to decide whether your investments in insurance are sufficient or not. It is also advisable to opt for a pension plan from among the various plans available in the market—this will secure your financial well-being in the post-retirement years by providing you with a regular income.

In the case of any claim dispute, where can my case be represented?

In the case of a claim dispute, the case can be represented before the insurance ombudsman. The ombudsman has judicial powers and can be challenged only in the high court. The Insurance Regulatory and Development Authority clearly articulates that a claim should ideally be settled within 30 days from the date of receipt of all relevant information. In case the claim warrants an investigation, the insurance company has to complete the investigation not later than six months from the time of lodging the claim. Moreover, in case a claim is ready for payment but the payment cannot be made due to any reasons, then such an amount will earn interest.

Readers are welcome to write in with their queries to The questions will be answered by senior executives from leading insurance firms.

This week’s expert is Bert Paterson, managing director, Aviva India.