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Higher premiums for existing ailments

Monday, November 22, 2010

I am suffering from diabetes for the last 5 years and I want to take a life insurance policy. Will the insurance companies approve my application? If yes, are there any special clauses, which I should know beforehand?
Deepak Punjabee, Lokandwala, Andheri West
Yes, insurance companies should approve your application for a life insurance policy. Many people with existing illness or disease apply for a life insurance policy. This is one of the reasons why insurance companies have a medical test before processing the application. The usual norm is that life insurance companies will levy an extra premium over and above the basic premium on those policy holders who have existing diseases. This extra premium is called the ‘load premium’. So if a normal healthy person of your age will be charged an annual premium of say Rs 8000 for a particular policy, then you may expect a load premium of approx Rs 2500 making your total annual premium to approx Rs 10,500. You should not worry about the load premium because the insurance company is justified in charging the extra premium because of the higher risk that they are covering.   
I have been advised to go for a root canal treatment by my dentist. I have a health insurance policy from one of the private insurance companies for the last 8 years; Will my existing health insurance policy cover the same?
Sujesh Shah, Ghatkopar West 
There are lists of expenses that are covered under a health insurance policy. There are certain variations in policies of insurance companies though. So most of the insurance companies will not cover any expenses related to dental treatment, but off late many companies have included covering dental expenses under their health insurance policy. You will have to check the policy document or brochure of your health insurance policy to see if they cover the same. In fact also go through the list of exclusions and check if dental expenses are mentioned there.
I want to renew my car insurance policy which expires in 2 days. But I am unhappy with my existing insurance company because of their poor service quality. I do not want to continue with this insurance company but my worry is – will other insurance companies renew my car policy? Will I lose any existing benefits?
Mahesh Kadam, Dharavi, Mahim East 
You can switch over the insurance company to renew your car insurance policy without any worry. Even if there is any existing benefit (like the No claim bonus), it can be transferred to the policy of any other general insurance company. Also, as per law, auto insurance is a compulsory product and no company can turn down the customer. If the insurers feel that the risk attached with insuring your vehicle is high, then they will quote you a higher premium (by adding loading charges), but they will not refuse you an insurance.
What are unit-linked plans and how do ULIPs actually work?
Bella Seth, Girgaum
Unit linked Insurance Plan (ULIP) is a type of life insurance plan that provides benefits of protection against risks and flexibility to manage the investments of premiums. Part of the premium paid by the customer goes towards the sum assured and the balance is put in investment venues like stock markets, mutual funds, money instruments, government bonds, etc. After deducting the charges from the premium, the investment corpus is broken into smaller units and these units carry a price or a value which it has attained called as the Net Asset Value (NAV). Thus NAV is also referred to as the price per unit. Usually, the traditional policies are managed by the insurance companies and they provide a moderate but assured return to the policy holder. In ULIPs, there is a risk attached but it comes along with the potential for high and attractive returns.
(The author is Vice President at www.MyInsuranceClub.com," target="_blank">http://www.myinsuranceclub.com/">www.MyInsuranceClub.com, insurance comparison website in India. You may write to him at )

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