Is there a waiting period after buying a term insurance plan?

—Name withheld on request

In a term insurance there is no waiting period for natural death or accidental death, except death by suicide. Even suicide is excluded only for the first year of the policy. In case of a claim within the first few years of the policy, the insurer may investigate the cause and circumstances of the claim. The purpose of such investigation is to identify whether there was any material non-disclosure by the policyholder. Otherwise, there is no waiting period, and the claim is admissible immediately.

I have come to know that KYC process will be mandatory for health insurance. Wasn’t this mandatory earlier? How do insurers issue policies? What are the details required to be KYC compliant? Why are insurance companies not taking such important information from customers?

—Name withheld on request

Insurance policies are issued on a good faith basis. While issuing the policy, the details declared by the applicant are considered. Identity verification of the policyholder is not done. This helps in easy on-boarding. Verification of identity is currently done at the time of claim. The details submitted at the time of offer are verified with the details of the claimant.

Effective November 1, KYC has become mandatory for all types of policies. For individual policyholders, insurers must verify identity, address and a recent photograph. Insurers will have multiple ways to complete KYC including Aadhaar-based offline verification or online authentication. The regulator also introduced the video-based identification process sometime back.

I am 35 years old and have a term plan 1 crore for a period of 35 years. This is 10 times my annual salary. Please let me know how can I increase my insurance cover. Also, is it possible to change the insurance company and the tenure of my existing term plan?

—Name withheld on request

Term insurance plans are bought for a longer period. In such plans, the premium and coverage are fixed for the term of the policy. Only certain term plans allow modification within a standard set of parameters. Hence, you need to buy additional term insurance plans to increase the coverage. It can be bought from the same insurer or any other. Term plans do not allow portability. Hence, you cannot transfer the existing term plan to a new insurer. However, you can buy a new term plan and discontinue the existing plan.

Abhishek Bondia is the Principal Officer and Managing Director of SecureNow.in.