Are there circumstances under which a life insurance company might refuse to pay for claims?
—Ayush Khatri
One exclusion allowed in a life insurance contract is suicide in the first policy year. Apart from this, the insurer can deny a claim if there has been material misrepresentation such as on medical or smoking history.
The Insurance Laws (Amendment) Act, 2015, stipulates that a life insurance claim cannot be denied after it has been in force for three years. Any instances of fraud or non-disclosure of information have to be discovered before that and the onus is on the insurer to determine the issues. This is good because it reduces ambiguity around claim payment.
The best approach in life insurance is to fully disclose your medical history. Opt for a fully underwritten insurance so that the insurer can assess your health itself.
I have been advised to take a child care plan for my 10-year- old daughter. Is this a good option, or should I consider a unit-linked insurance plan (Ulip) in my name?
—Suresh Pant
The nomenclature of a life insurance plan varies considerably among various insurance companies. Some prefer to market plans as child plans whereas others position these as regular life insurances.
The two important considerations if you want to buy a plan for your daughter are: whose life is covered, and when does the insurance mature.
