Tag: wealth management

Life Insurance: 5 reasons why you may be declined!

Life Insurance: 5 reasons why you may be declined!

Planning to choose a life insurance policy for yourself? You may be surprised to know that life insurance companies may not follow the ‘welcome all’ policy they may so advertise.

Every life insurance company has several clauses for declining life insurance cover. Ever wondered what they are? Here are the 6 most common ones that you may not know:


Known to be the root cause of major illnesses and conditions, overweight is certainly a red flag for life insurance companies. While being overweight alone may not be a sufficient ground for declining insurance (though the premium may be higher!), its existence with other health risks increases the likeliness of a decline.

Income limitations

Some life insurance companies don’t write a life insurance policy for someone whose income is below a certain level. That level varies between insurance companies.

Elevated Cholesterol, Lipids and Triglycerides

The main concern here isn’t necessarily high cholesterol, but rather the combination of high LDL cholesterol, and low HDL cholesterol. The combination puts you at higher risk for heart disease and stroke.


Even though AIDS and HIV are better understood now than in the past, and even though survival rates have improved dramatically, some life insurance companies still see them as red flags and may deny your application. However, there are companies out there that will provide life insurance subject to certain tests.

Hazardous occupations

Some occupations carry a higher degree of danger than others. This can make life insurance companies reluctant to approve policies if you are working in an occupation that is considered particularly hazardous.

Previous Declines on Life Insurance Applications

Life insurance companies subscribe to a system that enables them to share information on approvals and denials with other insurance companies. A previous denial is usually a red flag. But this doesn’t mean that just because you’ve been denied a life insurance policy in the past, that you can never be approved by any other life insurance company.

There are several more reasons why you may be denied insurance. But the point of this list isn’t to discourage you from applying for life insurance. Rather, it is to educate and make you aware so that you can go about it in the right way.

If you have been denied Life Insurance:

  • Find out the specific reasons for the denial. You’ll need this information in order to determine your next course of action.
  • Get copies of your medical records. Order copies of any medical records that were used by the life insurance company in declining your application.
  • Work with an independent insurance broker. There are hundreds of life insurance companies, and each takes a somewhat different view of various health conditions. A broker may be able to suggest a company that best suits your health and habits.

Hope this helps to make you an informed choice.

The Power of Compound Interest: Why you should start saving early?

The Power of Compound Interest: Why you should start saving early?

According to Albert Einstein, Compound Interest is “the greatest mathematical discovery of all time.” Here’s why we think that he may well be right.

Compound Interest has the magical ability to generate high returns even from modest savings. It is one of the methods to get rich over a period of time – a much faster method. It is quite straightforward: If you want the most return on your savings or investments, you want compound interest.

Amongst the two types of interest you can earn, Simple Interest is paid only on the money you save or invest (the principal), while Compound Interest is paid on your principal plus on the interest you have already earned.

Here we have an interesting chart, courtesy JP Morgan, that shows how returns from savings of 10 years can far outweigh returns from 30 years of savings – with the difference being only in the type of interest.


This is how Compound Interest works:

Let’s say you invest today Rs. 10,000 at 6% interest p.a. In a year’s time, you will end up with Rs. 10,000 + Rs. 600 interest = Rs. 10,600 total. So, instead of withdrawing the interest, you re-invest it for another year at the same rate of interest. This would mean at the end of 2 years, you will have Rs. 11,236 (Rs. 10,600 + Rs. 636 interest).

The reinvested Rs. 600 gave you an earning of Rs. 36 without you having to do anything. This may seem like a tiny amount initially, but when re-invested over and over on a long term basis, it can accumulate a surprising amount of wealth for you. The funda is simple: It is not just the principal but also the interest that is earning interest for you.

Now, let’s have a look at a broader time frame for investment:

Let’s say you invest Rs. 10,000 today and park it into Treasury Bills earning 4% on an average for the next 50 years, you will end up having Rs. 71, 067 if purchases were made through tax-free account. Had you invested in stocks, earning 12% average rate of return as a result of riding out of fluctuations, you would have ended up with Rs. 28,90,022 at the end of 50 years. Adding asset classes giving higher returns would result in 40 times more money thanks to the power of compound interest.

The key to getting maximum benefit out of Compound Interest is to start early and invest for a long period. If you are patient, the magic of Compound Interest will amplify the growth of your investment over time.

As they say, the right time to start saving is now. The capital is not really important as long as you stay committed to a long term of vision. Leave the rest to the wonder of Compound Interest to work its magic on your savings!

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