Query corner: Insurance

Insurance premium 

My date of birth is June 25, 1968. On January 24, I deposited Rs 9,900 towards the half-yearly premium for LIC's Jeevan Anmol policy (a term plan). The premium was for a sum assured of Rs 25,00,000 for 23 years. Subsequently, I was sent for medical examinations on three occasions. In April, I was told to deposit Rs 7,000 towards additional premium to cover health risk. However , neither the development officer nor the agent could explain what the extra premium was for. I wrote a letter to the branch concerned seeking the reasons for increasing the premium amount. But the response was vague. Is LIC right in increasing the premium without disclosing the reasons ? If not, where can I have my grievances redressed? Can LIC deduct the medical test charges if I choose to cancel the proposal and seek a refund of the amount? 

Shivakumar 

Offer and acceptance are the essentials of a valid insurance contract. When you submit your proposal form to the insurer, that is your offer; the insurer may accept the same or make a counter offer with some modifications. If the insurer accepts your offer and agrees to insure you, this is called an acceptance. In some cases, the insurer may charge an extra premium on account of underwriting of under-average lives that are subject to extra risks such as occupation hazard, being over-weight or underweight , smoking history and health, etc. If you cancel the proposal, the insurer will refund your initial amount, but may deduct the charges incurred on pre-insurance medical test. 

Insurance and investment 

I have the following policies: Met life (premium - Rs 95,000 pa), SBI Life (premium - Rs 1,00,000 pa), HDFC Life (premium - Rs 50,000 pa), HDFC Wealth Builder (premium - Rs 3 lakh pa), and LIC's Wealth Plus & Market Plus (premium - Rs 2 lakh pa). Since my sole purpose is investment, what returns can I expect and how long should I continue paying the premiums after the compulsory period of three years for SBI, HDFC and LIC policies? Is it advisable to stay invested for the full term of 10 years or withdraw the amount earlier from, say, Metlife ?? 
Suhaas Paradkar 

Insurance should be bought to manage risk and not for investment. You have multiple life insurance policies and you are paying a high premium . Considering the various charges in your policies, you should not expect encouraging returns from them.