Is a chain smoker eligible for a term life cover?

The insurance company will further evaluate the documents before paying out the claim and will do it in the quickest time possible basis the documents submitted.

by Kamlesh Rao

Q1. I had purchased a traditional money-back life insurance plan 20 years ago. The policy will mature in November, this year. I am 46 years old and do not have any other life cover. Do I need to purchase any Life Insurance policy after the older one matures?

Ans: A life insurance plan, besides helping an individual to save and grow money, is an income replacement tool. It hedges financial risks arising out of life-related uncertainties. Therefore, it is vital for any earning individual to remain protected with a life insurance cover, at least until his/her age of retirement. In your case, since you will not have any coverage from December this year, it is essential for you to get yourself covered at the earliest. Given the uncertainties looming due to the pandemic, it is crucial that you always remain protected. Therefore, as a first step, assess your financial responsibilities, health condition, future goals, and then opt for a life insurance policy that adequately covers you and your family’s future financial goals, until your retirement age at least or preferably even beyond that.

Q2. I am looking for a plan that gives me secured and guaranteed returns in the longer run. Shall I opt for a participating life insurance plan or a plan that offer full guaranteed returns?

Ans: To begin with, it is important for you to understand the difference between a participating and a non-participating plan. Participating plans offer returns that are partially guaranteed, and the upside is delivered in the form of bonuses. These plans are linked to market performance. Whereas, a non-participating plan offers benefits which are guaranteed upfront. The selection of a suitable plan depends upon your comfort with risk and the financial goals you are aiming to achieve. Given the current circumstances, if you are not comfortable taking risks with your investments, a non-participating or fully guaranteed plan works best for you. Such plans will lock-in your returns over the long term and will offer a guaranteed sum which is tax-free, at the desired time. There are plans which will also offer the flexibility of withdrawal, thus ensuring liquidity, besides providing long-term guarantee and life cover.

Q3. My uncle passed away last month. He had a life insurance policy for which his wife is the nominee. What is the process of claiming the amount?

Ans: First and foremost, your uncle’s family should inform the nearest branch of the life insurance company regarding his demise. The family of his wife will be required to submit five mandatory documents – a copy of the Death Certificate, Claimant Statement Form declaring details about your uncle (life assured) and his wife (nominee), KYC documents establishing her identity, Relationship Proof with the life assured and a Cancelled Cheque or Bank Statement to make NEFT pay-out of the claim. Your aunt will also have to submit the original policy documents. The insurance company will further evaluate the documents before paying out the claim and will do it in the quickest time possible basis the documents submitted.

Q4. I desire to purchase a term plan. However, I was a chain smoker but have quit smoking now. Will I be eligible for a policy?

Ans: A term policy is issued post medical tests undertaken by the life insurance company. Such tests are usually mandatory for a person opting for a term insurance cover. The policy proposal form along with the medical report further gets evaluated by the medical underwriting team, who can approve, reject, or rate up the policy basis for their assessment. Therefore, whether your policy proposal will be accepted or rejected will solely depend on the underwriter’s evaluation. You should apply for a policy post reading the terms and conditions of the insurance cover.

(The spokesperson is the MD, and CEO, Aditya Birla Sun Life Insurance)