To Clarify if Term Insurance CAP at 10 times the Annual Income ?

POSTED BY sushant2675 ON August 29, 2014 9:34 am COMMENTS (3)

I am hunting for a good Term Insurance and have a few queries. I had read somewhere that there is a Limit on Sum Assured for Term insurance which is capped at 10 times the annual income as per IRDA. I am a salaried individual and do have a precise monthly income. I searched the net for these doubts but could not get a definitive answer, which I want to clarify before I call in agents or apply online for one.

Now in the above light, I wanted to know:

1. Is 10 times still the current rule or has it been revised by IRDA?

2.  If I have other assets (like property etc.) will it be considered while applying the Cap and the cap be raised?

3. Say my annual income is 10 Lacs, is 1Cr a cap on single Term policy from one insurance company or is it a cap on total Sum Assured of all Term Insurances I can have?

4. Is the 10 times Annual Income for Gross Annual Income or Annual Take Home(after, TDS and other deductions) ?

Thanks.

3 replies on this article “To Clarify if Term Insurance CAP at 10 times the Annual Income ?”

  1. sushant2675 says:

    Dear Dr. Sachin,

    I might have understood your statement of insurance provider to be the decision maker, but what happens when I want to change hands on the insurance? If the new insurer has his/her own guidlines what happens to the delta? Am I protected?

    Regards,
    Sushant

  2. Dr.Sachin says:

    its up to the insurance provider.
    You apply for the term insurance to any provider and they will tell you the max limit up to which you can go to.
    While applying you need to declare the policies that you currently hold. The capping is decided after deducting the current insurance that you have.
    And theres no strict capping. It can vary with profession, age etc.
    and if you want to increase your SA at various stages of ur life, HDFC Life Click 2 Protect Plus provieds Life Stage Protection Feature in which you have an option to Increase your Insurance Cover on certain key milestones of your Life like Marriage, Child Birth without fresh medical test

  3. sushant2675 says:

    Well this article sort of had me thinking about a limit on SA on Term Insurance as well (see towards the end of the article):
    http://www.livemint.com/Money/RH00wlbsi04wdvXr4ZQiXK/Irda-has-relaxed-minimum-sum-assured-on-shortterm-policies.html

    But when I spoke to SBI Life (about Term Insurance) customer care yesterday(28th Aug, 2014), the lady said that there is no such limit on the SA.

    I still am not clear on this, but am posting this if it’s of any help to others.

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