Health insurer can up the premium

Jun 09, 2012 - Harsh Roongta

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If I want to take an insurance policy for 10-15 years, will the insurance company have a fixed annual premium or will it increase the premium based on the age and diseases encountered in the future?
Rajesh Varma, Bengaluru

I am presuming that you are planning to buy health insurance. The health insurance is generally a yearly contract and no policies are available for a long tenure as specified by you, except that the same is renewable year after year and the insurance company cannot refuse renewal except on the ground of fraud.

All health plans provide for an incre-ase in premiums based on the age of the insured person at the time of renewal. Some plans in addition to this also provide for inc-reasing the premium from the year subsequent to the year in which a claim is made. The percentage of such increase (known as loading) is pre-specified in the policy document. In addition, the insurer can increase premium with the prior approval of the regulator IRDA. Some companies such as Apollo Munich, United India and Max Bupa allow renewability up to lifetime on their policies.

An LIC agent told me about an endowment plan which offers pension, savings and other benefits. Is it true? Which kind of benefit I should get?
Raghavendra, Hyderabad

We always recommend you to segregate your ins-urance and investments requirements. Firstly, you should take adequate life insurance for yourself and your family. Life insurance is needed only for people who have a loan or have dependents on his income. In case you have any of them, you should consider taking a term life insurance policy. You should consult an expert on how much life insurance you need. Ideally, you should have life insurance of at least 12 times your annual income. Once you have taken adequate insurance, you should invest the remaining amount in various instruments depending up on the horizon of your investment. In case, you want to invest for a horizon of 10 years or more, you should consider taking higher exposure to equity mutual funds. You can also choose to invest in debt instruments like PPF for more safety.

I have taken a home loan about four years back for a tenure of 20 years. Now I want to transfer the loan to my brother. Please tell me if I need to make a new agreement to transfer the home loan or is it wise to gift it to him
Prakash Gupta, Hyderabad

You cannot gift or transfer a loan. You will need to pay your existing loan fully and your brother will need to purchase the property and get a new loan on it. You can sell the property to your brother, but you have to pay stamp duty for the change of ownership. Also your bank may agree to provide the loan to your brother based on his repayment capacity to buy your house. Please note that if you transfer your house within five years, the income tax benefits availed by you, if any, in respect of principal repayment under Section 80 C will be treated as your income of the year in which you transfer your property.

Harsh Roongta is the CEO of Apnapaisa.com.
You can send in your queries to movingmoney@deccanmail.com

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