Health Disclosure During Life Insurance Purchase: A real life example

June 29, 2013


Many a times people purchasing life insurance policies, do not take care to fill the health declaration form seriously or they themselves want to declare but the Agents do not disclose properly. How this mistake can prove your loved ones costly in your absence, you ‘ll understand after going through the next few lines below.

The Background- Mr. Pradeep Dumbu, one of the member of our Facebook Group shared his own experience related to health disclosure while purchasing a Life Insurance Policy.

Quote – I belong to a village in Andhra Pradesh. My father was an Investor in Sri Ram Chit Funds. Later on the chit collection agent sold an endowment policy from Sri Ram Life Insurance Company of Sum assured 100000 Rs. to My father in 2006. At the time of filing the application form, my father told the agent that He is diabetic for past 20Y but the agent told that it’s not an important issue & as the sum assured was small, no Medical test was carried & policy was issued. My father were paying the prem. regularly. Last Year my father died & when me & my mother filed claim, the Insurance Company denied the claim, stating the reason that Father’s Health Condition of being Diabetic was not disclosed at the time of purchase of the policy. What should I do now to get our insurance amount from the insurance company?

Unquote- All of us now can understand that Insurance company is not honoring even a small claim amount of 100000 Rs. & being an endowment policy, the overall deal is not that much in loss to Insurance Company. Still this real life incident teaches us a valuable lesson. What can be the impact of wrong or understated health declaration while purchasing a Term plan where Prem. is very less & the Sum assured is very high?

What’s your take now on reporting your & your family’s health condition & history while purchasing a life cover? Please share your learnings in the comment section below.


Life Insurance: Real Life Example

June 28, 2013


Many a times, we receive e-mails from the readers to thank us. Once in a while we do receive some interesting e-mails. here I’m reproducing one such mail received from Mr. RajKumar.

Quote –

Manish,Ashal – I should thank you as much as I can for the financial awareness that you have set on me. This is one incident that happened @ my home today. I wanted to share with you.
I have a 7 month old baby. We used to make him sleep in a cradle. Not a wooden cradle. We used to hang a big cloth stitched specifically for making the baby sleep. We use this from the cieling of the wall and swing it to make the baby sleep. Off late, we started placing a small bed below the cradle so that even if the baby falls from the cradle – it ll land up safe rather than hitting hard on the floor.When I started using this bed below the cradle, I explained my wife this is called as Insurance 🙂 (Thanks to the 1st book where Manish explained about the insurance options that we use on a day to day life like Helmet etc).
Today,my kid slept and I moved out of the room. After sometime, I heard my baby crying. When I went there I saw my kid on the floor and partly on bed. He actually fell from the cradle. The good part is there was no injury to him.. He was ok in sometime.
After all the chaos at home, I told my wife our insurance saved us.. She laughed 🙂 Had this been a thin sheet of cloth – it should have been Jeevan Anand (which was the only insurance that I had before I knew Ashal).. This bed was better which is pure term insurance 🙂 It really taught me a good lesson today. More importantly, my son gave me this wonderful lesson as a gift to me on my birthday today.
I would like to thank both of you for all the knowledge that you have shared to me so far.
Unquote –
That was a simple yet effective example from daily life for what is Risk coverage all about. What are your learnings from the post. Please feel free to share.


ICICI Pru Life’s Online Term Cover – I Protect

August 18, 2010


Dear friends, Earlier it was Aegon Religare’s I- Term, the lone player in online Term cover Market but now it has a companion from the big daddy of private life insurers in India – ICICI PRU Life. The product is named as I-Protect.

Product at a glance –

Minimum /Maximum Age at entry – 20 / 65 years

Policy Term – 10, 15, 20, 25, 30 years

Maximum age at policy expiry – 75 Years (Age completed Birthday)

Minimum Premium – 2000 Rs. (Excluding Service Tax & Education cess)

Accidental Death Benefit (Available with IProtectOption II only) – Equal to basic sum assured with maximum limit to 50L

Premium Payment term – Regular pay

Mode of Premimum Payment – Yearly only

Tax benefit – Prem. paid is eligible for Tax benefit under Section 80C of Indian Income Tax Act, 1961

Available Options – Option I Basic Life cover, Option II Basic Life Cover With Accident Death Benefit Rider

Death benefit – Option I – Basic Life Cover

Option II – Basic Life Cover + Accident Rider Sum  Assured equal to Basic Sum assured or 50L whichever is lower

Instant Life Cover – Policy ‘ll be issued immediately after realization of the prem. amount by the Ins. Co. for Non Medical Cases.

Maturity Benefit – Being a pure Vanilla Term Cover, there is no maturity benefit.

Offline Purchase – Yes allowed with a slightly higher prem. (To include the commission of Agent/Broker)

My take – I-Protect is a real competitor for Aegon Religare’s I-Term. Actually it’s better than I-Term. How here it goes –

Max. Term – 30Y in I-Protect for 25Y in I- Term

Accident Rider – Yes for I-Protect no for I- Term

Offline Purchase – Yes for I-Protect no for I-Term

Maturity Age – 75Y for I-Protect  where as it’s 65Y for I-Term

The major plus point with I-Protect, ICICI Pru Life has offices, agents, brokers, bankassurance channels in every nook & corner of India, Hence purchasing the cover online of offline is very easy as compare to Aegon Religare’s limited presence.

In my view, if you are planning to purchase your first Term cover or want to increase one, go for this one.

For More info about the product click here.



Life Cover may got cheaper

August 16, 2010

Dear Friends, Please check the link below.



Annuity Payment options against Pension Policy

July 7, 2010

Please guide me as to how to decide about selection of proper option from the following options offered by Pension Plan :

1. annuity as long as one annuitant lives

2. annuity guaranteed for 5, 10, 15 or 20 years and life thereafter

3. annuity with return of purchase price to nominee

4. annuity payable for life increasing at a simple rate of x%

-Vinayak Bapat

Dear Vinayak, each of the option listed by you has it’s own pros & cons.

1. Annuity for life – In this case the annuity amount is highest but the annuity stops the moment, annuitant dies. In this option, If there is a surviving spouse, S/he ‘ll not get any more annuity from the annuity provider. This Option is beneficial to the persons, where no spouse is there to survive or extra provisions are already there for spouse.

2. Annuity Gtd. for a certain period – In this option, the Annuity is provided for a certain period no matter, annuitant is alive or not during the full period. In case of premature death of annuitant, this option ‘ll provide annuity till the gtd. period is over. If the annuitant survives the gtd. period, the annuity ‘ll continue till the death of annuitant & ‘ll stop after her/his demise. This option is beneficial again for persons, where there is a surviving spouse & there is a history of early death in the family.

3. Annuity increasing with a simple rate of 3% – This type of annuity ‘ll provide a small cushion towards inflation in the later part of life. The amount of annuity is lower here than the prev. 2 discussed. Here again the annuity stops after the death of primary annuitant.

4. Annuity with return of purchase price – Under this type, annuity is paid first to annuitant till life than to spouse till life & after that the purchase price is returned to the nominees of the annuitant. The payment in this type of annuity is lowest. This is suitable to the persons who wants to leave a fortune for their heirs after their demise.



Need Insurance Help

June 12, 2010

Last year i purchased three LIC policies, LIC Endowment policy, Jeewan Surabhi & LIC money back policy. I paid a premium of around 50000 & they gave me a cover of 14 lakh. It was also told to me that these policies will give me a return of 8%, but now a few of the experts suggested that these policies will just give a return of 4 to 5 %. What should i do. Shall i continue with these policies as they diversify my portfolio, or shall i allow these policies & amount ot lapse& i should start investing in ELSS? All the policies that i have took are for 25 & 30 years. I have sufficient term insurance. Kindly guide me in deciding my tax planning for this yearso that i dont repeat the mistake that i have done.


Nagendra Singh Dhani

Dear Nagendra, from your query, it seems you were mis-sold for the policies, you are referring to. In my view, Stop paying more prem. in these policies.

Uou may divert the prem. amount to a better managed pure Debt fund or a low. Eq. exposure MIP fund like Birla MIP II savings 5 fund. The reason lies in your query that you were using these policies for diversification of your portfolio into debt class.

As you already have sufficient term cover, no need to purchase more term cover.



How to get a TAX FREE Pension

June 5, 2010

Now a days a lot of young males & females are investing in Pension Plans offerd by almost all Insurance Cos. in India with a target to save enough for their sunset years. Once they are retired from their jobs, the accumulated corpus ‘ll provide the handsome pension, as the TV commercials of these Insurance cos. showcase.

If life is so simple, then there should not be any problem on earth. The basic problem with all such pension plans & investors who are investing in these plans, neither the plan providers (read Ins. cos.) are giving full details nor the customers (investors) are aware regarding their future – 1. What ‘ll be the accumulated corpus?

2. what ‘ll be the appx. returns (read pension)?

3. What is tax treatment of pension?

4. till how much time, the pension ‘ll be given?………

Not many people give serious thought on these aspects. The most cruicial part of retirement planning thru these pension plans is – people are not aware, How the income tax liability/applicability ‘ll impact their over all pension.

1. Premature Withdraw – If due to any reason, the person, wants to premature withdraw of this pension plan, the surrender amount ‘ll be added to the taxable income from all other sources in the Financial Year of Receipt of such surrender value.

2. Start of Pension – At the time of start of pension (also known as vesting age in Insurance Cos.), The investor may withdraw a max. 1/3rd amount of her/his accumulated corpus till date as Tax free Cash commutation. Balance ‘ll be used for pension generation. As per IRDA guidelines, the investor has option to put remaining amount with any Ins. co. which is offering max. pension on this corpus.

Normally people prefer to start pension @ age of 60 years. Now comes the most interesting part of taxation on pension plans. Whatever amount received as pension ‘ll be added to the income from all other sources in the relevent financial year & taxed accordingly. At the same time, the cash commuted part (if opted for) ‘ll also be invested in safe avenues like SCSS, Bank FDs, PO schemes, Etc. The interest earned from such investment as already taxable. Hence the total pension generated from accumulated corpus as well as interest income from CASH COMMUTED part is taxable.

Now comes the question – How we can manage to avoid such income tax on our pension?

If an Investor, wants to invest in UNIT Linked Pension Plans (ULPP) to receive pension, it is better to invest in whole life ULIP or at least age 75 ULIPs. The investor should note here that money received from Life Insurance policies are tax free under section 10 (10) (D) as per current indian tax law. So once the investor reaches the age of 60 (the noraml retirement age) s/he may start withdrwaing tax free pension from ULIP in the form of partial withdraw.

As already mentioned these withdrawls ‘ll be tax free. the added advantage in case of ULIPs as replacement of ULPP is, one can plan her/his withdraw according to need whereas in case of ULPP, a fixed sum ‘ll be given no matter, ur actual requirement is less or more than it.

While selecting ULIP as pension plan, always try to invest in the ULIPs which offers lowest cover multiple say 5X or 10X of ur annual prem. & the same time plz. don’t overlook the other aspects of ULIPs. Fund management charges, policy admin charges, Prem. allocation charges etc.
Hence make a wise call & if u r really interested to invest for ur pension, invest in a whole life or age 75 ULIP to get a “TAX FREE PENSION.”