Am I eligible for surrender value after the first-year premium payment?

I purchased a life insurance policy in 2023, but I plan to surrender it because I have lost my job. I heard that the surrender value will also be available after one year. What should I do?

-Name withheld on request

As per the Insurance Regulatory and Development Authority of India’s (IRDAI) new rules, starting from 1 October 2024, policies bought after this date will be eligible to receive a surrender value from the first year itself. So, if your policy was bought before 1 October 2024, the previous regulations regarding the surrender value would still govern your policy.

Given your current situation of a temporary job loss, it can be challenging to manage your financial commitments, including the payment of life insurance premiums. It’s important, however, to remain optimistic about finding new employment soon. While the circumstances may be tough, taking proactive steps can help you navigate this period effectively.

Explore options to fund your second premium. There are several ways to approach this, such as reviewing your savings, considering a temporary loan, or even discussing flexible payment plans with your insurer.

While it may be tempting to surrender your policy or let it lapse due to immediate financial pressures, this could have long-term consequences. Compromising life insurance coverage, especially during unpredictable times, can expose you and your family to risks. If something unforeseen were to happen, the absence of adequate coverage could result in significant financial strain.

Moreover, reinstating a lapsed policy in the future may come with higher premiums or require new medical evaluations , adding complexity and cost to securing the protection you initially had.

In summary, while the new IRDAI guidelines provide more flexibility for policyholders, those who purchased policies before 1 October 2024 are not eligible for these updated terms. Despite temporary financial setbacks, it’s essential to prioritize maintaining your life insurance coverage. Exploring alternative ways to manage your premium payments in the short term can help you avoid compromising on this crucial financial safety net for your family.

I was recently diagnosed with type 2 diabetes, and I purchased my health insurance policy in 2023. Do I need to declare this condition when I renew my policy?

-Name withheld on request

Since your diagnosis of type 2 diabetes occurred after you purchased your health insurance policy, you are not required to disclose this condition when renewing your policy. According to insurance regulations, only pre-existing conditions—those present before you filled out and signed the proposal form—must be disclosed when purchasing the policy. Since your diagnosis came after the policy was issued, you are not obligated to declare it when renewing your coverage.

Rest assured, your current policy remains valid under the terms agreed upon at the time of purchase. The insurer is bound to honour the original terms of your policy, as the diagnosis occurred after the policy came into effect. This means your health insurance continues to offer the coverage you initially signed up for.

However, while there is no obligation to report the diagnosis during renewal, informing your insurer about your condition may still be beneficial. Many insurance companies are introducing innovative support programmes for policyholders dealing with chronic illnesses like diabetes. These initiatives often include access to support groups, health management tools, and awareness sessions to help individuals manage their conditions more effectively. By informing your insurer, you could potentially gain access to these additional resources, which may prove valuable in managing your diabetes.

Shilpa Arora is co-founder and chief operating officer at Insurance Samadhan.