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Term assurances are the purest and cheapest form of insurance. Term assurances are plans where benefits are payable only on the death of the policy holder within the term.
Whole of the life are a special type of term assurance wherein the term of the policy is whole life plans. So the benefits under the policy are payable only on death of the policy holder.
Endowment plans are among the most popular forms of insurance as they provide both insurance coverage and also act as a savings instrument. These are the plans wherein benfits are payable on death within the term or survival to maturity which ever is earlier.
Money back plans are a special type of endowment plans and are also called as anticipated endowment assurance plans. Under money back plans, survival benefits are spread over the term of the policy i.e., certain percentage of sum assured is paid at regular intervals.
Apart from these benefits, full sum assured is also payable in the event of death of policy holder during the term of policy, irrespective of survival benefits.’
Nomination is the process of identifying a person to receive the policy money in the event of the death of the Policyholder.
1 When to nominate Nomination can be done at the inception of the Policy by providing details of nominee in the proposal form. However, if the nomination is not done at the inception of the policy, the policyholder can nominate at a later date. This nomination has to be effected by giving notice in a prescribed form to the insurer and getting it endorsed on Policy Bond.
2 Change of Nomination Change of Nomination can be done by the Policyholder any time during the term of the Policy and any number of times. For this, the policy holder has to give a notice in a prescribed form to the insurer and getting it endorsed at the back of the Policy. Further, Nomination can be removed any time by the Policyholder without giving prior notice to the Nominee.
3 Procedure for Nomination Nomination can be done only by a policyholder who is a major holding Policy Bond in his own name. In the case of Children's Policies, Nomination is not done until the Child becomes major.
4 Rights of a nominee Under Nomination, the Nominee gets only the right to receive the policy money in the event of the death of the Policyholder. Nomination does not pass on the property in the Policy. If Nominee dies when the Policyholder is still surviving then the nomination would be ineffective. Nomination has no effect if the Policyholder is surviving. If Nominee dies after the death of the policyholder but before receiving policy money, then also Nomination becomes ineffective and money can be claimed only by the Legal Heirs of the Policyholder.
5 Rights of a nominee Under Nomination, the Nominee gets only the right to receive the policy money in the event of the death of the Policyholder. Nomination does not pass on the property in the Policy. If Nominee dies when the Policyholder is still surviving then the nomination would be ineffective. Nomination has no effect if the Policyholder is surviving. If Nominee dies after the death of the policyholder but before receiving policy money, then also Nomination becomes ineffective and money can be claimed only by the Legal Heirs of the Policyholder.
Policy holders are eligible to take loans on their policies subject to certain procedures, as prescribed by insurance company.
Premiums paid in Life insurance is eligible for rebate under section 80C of Income tax act. In non-Life Insurance, only medical insurance is eligible for rebate under section 80D, for individuals and HUF.
The cash value payable by the insurance company on termination of the policy contract at the desire of Policyholder but before the expiry term is known as Surrender Value. A policy can be surrendered, provided the policy is kept in force atleast three years.
It is very difficult to place a monetary value on human life. Theoretically therefore an individual can have life policies for any amount. However, in practice, it is determined based on the needs for insurance and the capacity to pay premiums regularly.
After payment of three years of premiums if subsequent premiums have not been paid under a policy, such a policy is said to have acquired a paid up value, though literally it is a lapsed policy. The paid up value is calculated by multiplying the sum assured by the ratio of number of premiums paid under the policy and the number of premiums payable under the policy. The value so arrived at, should not be less than Rs.250 excluding the accumulated bonus under such a policy. Such a reduced paid up policy will not be entitled to participate in future bonuses.
This life policy is designed to meet the requirements of individual borrowers to ensure that the outstanding loan is extinguished automatically in the event of the borrowers death. The annual premiums depend on the schedule of outstanding loan amounts at the beginning of each year. On death of the borrower the loan is liquidated straightaway by admittance of claim under the policy. Benefits are fixed and death benefit decreases with every year. Premium under the plan can also be paid in a lumpsum as single premium.
Riders/add ons are the additional benefits which can be added to the basic policy by paying marginal additional premium. Each company has got their own set of rider and most common riders offers by insurers are:
Permanent total disablement means that the life assured is incapacitated to work or follow an occupation and obtain wages, compensation or profit.The following are considered to constitute such disability:
irrecoverable loss of entire sight of both of the eyes
A policy issued under a with profit scheme is eligible to participate for bonus addition arising out of surplus revealed on conducting an actuarial valuation. Premium under a with profit plan is always greater than the rate for a with out profit plan. that is while computing the structure of a premium table a bonus loading is made to the rate determined by the other three factors viz., Mortality, Interest and expenses.
Every year the policies that are in force are valued and the present value is arrived at. The assets are also valued as on that date and a comparison is made to ascertain the valuation surplus.