Photo: iStock
Photo: iStock

It is possible to convert a term plan to an endowment plan after a few years

  • However, generally, endowment plans have limited medical underwriting requirements in any case; so you may be okay without the conversion option
  • A few health plans are convertible as well. These are generally top-up health plans, which can be converted into standard health policies

What is a convertible insurance policy? Is it good? I am 37 years old, married with one child.

—Rinish Tandon

A convertible life policy allows you the option of converting it from one type to another after some years. Usually, the convertible option is available with term life insurance policies. Here, after a few years, the policy can be converted to an endowment plan. Insurers may charge extra premium for this option. When you convert, your premium will be revised to reflect the premiums of the insurance that you have converted to. The benefit of such plans is that no medical test or detailed underwriting is needed when you convert. However, generally, endowment plans have limited medical underwriting requirements in any case; so you may be okay without the conversion option. You can just buy insurance when you require it.

A few health plans are convertible as well. These are generally top-up health plans, which can be converted into standard health policies. Top-up plans have a threshold called the deductible. Claims only above this deductible amount are admissible under the plan. That’s why top-up plans are an inexpensive way to enhance your coverage. When you are working in a corporate, which provides group health cover, you can take a top-up plan to enhance your coverage. The deductible amount can be borne by the group policy, and the excess can be covered under the top-up plan. If you leave the job, you can convert the top-up plan into a nil deductible plan. A few top-up plans offer this convertible option.

The regulator has recently issued guidelines on migration in health insurance. This feature allows you to change products within the same insurer without loss of continuity benefits. So, in a sense, convertibility is getting embedded in the core insurance product.

My family and I are planning to go to the US for three months. We have gold worth 30 lakh at our home and my branch doesn’t have the locker facility. Does home insurance or any other insurance cover gold?

—Venkat Iyer

Home insurance allows coverage for jewellery that can be taken to cover high-value gold. But these plans usually do not cover any loss if the house is left unattended for a long period of time. Since you would be leaving the gold unattended for three months, your risk will not be covered. You should declare this to the insurer who may issue a stand-alone jewellery insurance. The insurer is likely to get a pre-issuance inspection and valuation done. It may also warrant you to keep the gold in a safety vault in the house.

Abhishek Bondia is principal officer and managing director, SecureNow.in. Queries and views at mintmoney@livemint.com

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