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Whole-life term plan is expensive

india Updated: Jul 22, 2011 21:47 IST
Deepti Bhaskaran

Name of the product: IDBI Federal Life Insurance Co. Ltd’s Termsurance Seniors Insurance Plan.

What is it?
This is a whole-life term plan that insures individuals between the age of 50 years and 85 years for their lifetime.

What do you get?
If the policyholder dies within two years of buying this policy, the insurer will not pay the sum assured, but only 125.0% of the premiums paid. However, after two years, the entire sum assured is paid.
There is no maturity benefit and the death benefit is given only to the nominee. You need to pay premiums till you turn 90 years.
You can’t surrender the policy before you have paid premiums for three years.

What’s special?
According to the company, this policy poses no problems as far as underwriting is concerned. Any individual between the age of 50 and 85 can get a cover without any kind of medical tests or interrogation.
You don’t need to give any health-related information. This information helps in assessing the risk the insurer is taking in insuring the policyholder. Here, the insurer has tried to contain this risk by charging higher premiums and limiting the cover to R5 lakh.

Our take
Usually, by the time you retire you would have no financial dependants and you would have discharged your major financial liabilities. That’s why we recommend that you take a cover up to 60 years of age.
This plan is expensive and the cover is limited. Buy this plan only if your health conditions preclude the purchase of a term plan.