Life Insurance: Can you extend the period of a term plan? Here is the answer

The interest rate charged by insurers on loans depends on the time when a policyhold-er is opting for a loan. (Thinkstock)

I have a term plan for 60 years, which I had taken 10 years ago and another 10 years are left for the cover. Can I extend the insurance cover till the age of 80?
– Aarav Singh

An insurance policy is a contract that you agree to at the time of the policy purchase. Since you have already agreed upon a maturity date at the time of buying it, it is sacrosanct. You will not be able to revise or change the agreed term or num-ber of years. However, you can buy another cover which will insure you until 80 years.

What is the interest rate insurers charge on loan against policies?
—Vipul Kumar

The interest rate charged by insurers on loans depends on the time when a policyhold-er is opting for a loan. The rates are mostly linked to an index. For example: 10 year G-Sec yield or base interest rates from the banks which are approved by Irdai. This rate, however, may vary between insurers.

If I surrender my policy after five years, will the company deduct any charges from the premium?
—Suresh Prasad

Surrender values are not directly linked to amount of premium paid, rather it depends upon the unit value of the Unit Linked Policy or the accrued benefits (called paid up value) of the traditional policies. Hence, deduction on surrender depends on the policy you own and its features. In case you have a Ulip, you will get full unit value as the surrender charges would be zero after five years. If you hold a traditional policy then surrender value will be some discounted value of the accrued paid benefits. These charges vary from product to product and are mentioned in the policy contract.

What are the chances that my claims will be rejected?
—B V Rao

Insurance policies are contracts based on the policy of utmost good faith. It requires you to disclose all relevant personal information, including current health condition and health issues of the past. If you have provided all relevant information correctly, chances of your claims getting rejected are very bleak. It is also important to note the inclusions and exclusions mentioned in your policy contract, product brochure and on the company website. Also please note that as per Section 45 of The Insurance Act, no claim can be rejected if a policy has completed three years.

Pankaj Razdan is MD & CEO, Aditya Birla Sun Life Insurance and Dy. CEO, Aditya Birla Capital. Send your queries to


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