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I bought a term insurance, and the insurance agent said there a waiting period of two years and the nominee will not get anything if the policyholder dies within the first two years of policy purchase. However, after two years, the insurer cannot reject the claim. Is that so? Please explain.

—Name withheld on request

A term insurance has no waiting period for natural death or accidental death, barring death by suicide. Even suicide is excluded only for the first year of the policy. In case of a claim within the first few years of the policy, the insurer may do an investigation on the cause and circumstances of the claim. The purpose of such investigation is to identify if there was any material non-disclosure by the policyholder. Otherwise, there are no waiting periods, and a claim is admissible immediately.

I have come to know that the KYC process will be mandatory for health insurance. Was it not mandatory earlier? How do insurers issue the policy? What details are necessary for being KYC compliant? Why are insurers not taking such necessary details from customers?

—Name withheld on request

Insurance policies are issued on the basis of good faith. At the time of policy issuance, details declared by the applicant is considered. Identity verification of the policyholder is not carried out. This helps in easy on-boarding. Verification of the identity is currently done at the time of claim. The details submitted at the time of proposal is then verified with the details of the claimant.

Effective 1 November, KYC has become mandatory for all kinds of policies. For individual policyholders, insurers would have to verify the identity, address and a recent photograph. Insurers would have multiple ways to complete the KYC including through Aadhar-based offline verification or online authentication. The regulator had also some time ago introduced the video-based identification process.

I am 35 years old and have a term plan of 1 crore for a period of 35 years. It is 10 times my annual salary. Please let me know how I can increase my insurance cover. Also, is it possible to change the insurance company and the term period of my existing term plan?

—Name withheld on request

Term insurance plans are purchased for long term. In such plans, premium and coverage is fixed for the duration of the policy. Only few term plans permit modification, within a standard set of parameters. So, to enhance coverage you need to buy additional term insurance plans. This could be bought from the same insurer or a different one. Term plans do not allow portability. So, you cannot shift the existing term plan to a new insurer. However, you can buy a new term plan and discontinue the existing plan.

Abhishek Bondia is principal officer and managing director at SecureNow.in.

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