Photo: iStockphoto
Photo: iStockphoto

Always pay premiums directly to insurance firms, and not to agents

Also, A lapsed insurance policy can be revived by paying past premiums, interest and other administrative charges that insurers levy

I have four money-back policies. I was unable to pay the premiums for two years due to financial problems. After two years, when I contacted my agent, he asked me to transfer Rs1.05 crore to his account, which I did, but even after six months of transferring the amount, he has not paid the premiums. Should I get in touch with the insurer? How do I get my money back?—Srikanth

If you do not pay renewal premiums within the grace period, the insurance policy lapses. A lapsed policy can be revived by paying past premiums, interest and other administrative charges that insurers levy. However, in no case should the money be paid to the agent or intermediary. Premiums have to be paid directly to the insurer only.

You should report this to the insurer immediately with payment proof. It will help to substantiate your claim with documentary evidence of the agent’s request to transfer the money to his account or an acknowledgement of the money received. In the complaint, mention the agent licence ID. You can source this from your main policy. This will help the insurer trace the agent.

If the issue is still unresolved, you should approach the Insurance Regulatory and Development Authority of India’s (Irdai) grievance cell. Failing which you can either go to the insurance ombudsman or file a police complaint for forgery.

I want to invest in a child insurance plan for future education expenses of my son. My wife and I can pay a monthly premium of Rs10,000. Please suggest a suitable plan.—Santosh Mehta

One of the key risks to building your child’s education corpus is the death of either of his parents. Reduced income will lead to lower savings and lower disposable income. To protect against this risk, both of you should buy a term plan on your lives. This will give the family a lump sum in case either of you die. This corpus can be used to fund your son’s education. You should look at a sum assured of at least 10 times your annual income. The cover could also help pay for the dependant’s expenses.

You can invest your remaining savings into mutual funds, fixed deposits or unit-linked insurance plans (Ulips).

I have a life insurance cover of Rs50 lakh. I earn Rs15 lakh gross annually. My two children and my parents are dependant on me. My wife is on the verge of losing her job as her company has gone bust. Should I increase my life cover or is it enough? Should my wife take a cover before she loses her job? —Tushar Vyas

You are significantly underinsured. As a thumb rule, term insurance should be at least 10 times annual income. In your case, the multiple can be higher as your financial liabilities are higher. You should look at a sum assured of Rs2 crore or more. You can ask your wife to take a term insurance as well. It will be easier to get it now, as she can show a source of income. When a person is out of job, even temporarily, insurers are reluctant to give high sum assured.

Abhishek Bondia is principal officer and managing director,

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