Insurer may ask for basic income documents for high value coverage

While buying a life insurance policy do I have to show the rental income from my property along with my salary income as proof? – Parag Keswani

Insurance is a contract of utmost good faith. Hence most of the companies allow issuance of insurance coverage basis declaration (for example income, health, etc) and KYC documents. No income documents are required up to specified sum assured. This cut-off will vary with every insurer, basis their sourcing experience. However, for high value coverage, companies do ask for basic income documents and for a salaried individual, if there is an additional income in form of rent, the same would reflect in his ITRs. Companies do not insist on additional documents. However, its always prudent for insured to provide every disclosure, as appropriate.

I have a pension policy purchased more than 15 years ago. I pay Rs 10,000 premium every year. After retirement it will give me very little pension every month. Should I discontinue it? – Prema Ravichandran

Considering you have been invested for over 15 years, it would be advisable to continue paying premiums to fully avail the benefits of the plan including the tax perk. If you choose to discontinue, the cash value will be lower than the corpus you are likely to receive at the end of the policy tenure. As this is a pension plan, the amount received at the end of the tenure needs to be utilised purchasing annuities only. Also, I would refer you to your insurer to understand the complete details of the product as the returns on the plan would vary at maturity based on whether it is a market-linked or traditional pension plan.