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It’s great to see an insurance company with a >99% claim settlement ratio. What are the relevant questions to ask an agent?

                   — Devyanshu Gupta

 

There are a few more aspects that you should investigate besides the claim settlement ratio. This would allow you to get a better shortlist of insurers. First, look at the proportion of claims settled within three months. This serves as a good measure for the speed of claim settlement. Second, the number of grievances raised against the insurer serves as an indicator of disputes between policyholders and the insurers. Third is the solvency ratio of the insurer. This is a measure of its financial health, and the ability to fulfill its financial liabilities towards claims.

 

What is the concept of whole life in a life insurance policy? What happens if a person who has taken a whole life policy lives for 110 years? Will the policy continue after this period if premiums are paid regularly?

— Name withheld on request

 

Whole life insurance policies are meant to provide coverage for an extended tenure, typically till 100 years of age. A whole life term plan is suited for people whose nominees would remain dependent on them life-long. A child with special needs is an example of such a dependent. While the coverage is provided till 100 years of age, the premium paying term is shorter, say till 65 years. Insurers offer shorter premium paying terms as well.

In case the person survives for 100 years, then the maturity value is paid. The maturity value depends on the type of the underlying plan. If it is a ULIP plan, then the fund value as on the date of maturity would be payable. However, if it is a participating endowment plan, then the maturity value comprises the sum assured, and the accrued bonuses declared by the insurer. If the insured dies before attaining 100 years, then the higher of the guaranteed death benefit and investment value is payable. Investment value in the case of ULIP is the fund value, and in the case of a participating endowment plan is the sum assured and the accrued bonuses.

Since the premium paying term is generally shorter than the coverage term i.e., 100 years, a premium is not payable after 100 years. The policyholder gets the maturity value after this and the policy ceases to exist.

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

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